Direxion Daily 7-10 Year Treasury Bull 3X Shares (TYD)

ETF Direxion Daily 7-10 Year Treasury Bull 3X Shares (TYH)

Profile

Target Sector: US Treasury Bonds (7-10 year maturity) Asset Allocation: 100% fixed income (US Treasury bonds) Investment Strategy: Seeks to deliver 3 times the daily performance of the ICE U.S. Treasury 7-10 Year Bond Index

Objective

The primary investment objective of TYH is to provide leveraged exposure to the performance of the ICE U.S. Treasury 7-10 Year Bond Index. This means that the ETF aims to deliver triple the daily returns of the index, whether positive or negative.

Issuer

Company: Direxion Investments Reputation and Reliability: Direxion is a reputable ETF issuer with over 20 years of experience in the market. However, it primarily focuses on leveraged and inverse ETFs, which carry a higher risk profile. Management: The ETF is managed by a team of experienced portfolio managers at Direxion, who have expertise in fixed income markets.

Market Share

TYH holds a relatively small market share in the leveraged Treasury bond ETF space, with approximately 1.5% as of November 2023.

Total Net Assets

TYH has approximately $150 million in total net assets under management as of November 2023.

Moat

Unique Strategy: Leveraged exposure to 7-10 year Treasuries Niche Market Focus: Caters to investors seeking short-term, amplified exposure to specific Treasury maturities

Financial Performance

Historical Performance: TYH has delivered strong returns in periods of falling interest rates, but has also experienced significant losses during rising rate environments. Benchmark Comparison: TYH has generally outperformed its benchmark during periods of falling interest rates, but underperformed during periods of rising rates.

Growth Trajectory

The growth trajectory of TYH is highly dependent on the direction of interest rates. In a falling rate environment, the ETF is likely to experience strong growth, but in a rising rate environment, it may underperform.

Liquidity

Average Trading Volume: TYH has a moderate average trading volume of approximately 200,000 shares per day. Bid-Ask Spread: The bid-ask spread for TYH is typically around 0.05%, indicating relatively low trading costs.

Market Dynamics

Factors affecting TYH's market environment include:

• Economic indicators: Changes in inflation, economic growth, and monetary policy can significantly impact Treasury yields.
• Sector growth prospects: The 7-10 year Treasury market is sensitive to changes in long-term interest rate expectations.
• Current market conditions: Market sentiment and volatility can also influence the performance of TYH.

Competitors

Some key competitors of TYH include:

• TQQQ: ProShares UltraPro QQQ (NASDAQ: TQQQ) - 3x leveraged to the NASDAQ-100 Index
• SPXL: Direxion Daily S&P 500 Bull 3X Shares (NYSEARCA: SPXL) - 3x leveraged to the S&P 500 Index
• UPRO: ProShares UltraPro S&P 500 (NYSEARCA: UPRO) - 3x leveraged to the S&P 500 Index
• TNA: Direxion Daily Small Cap Bull 3X Shares (NYSEARCA: TNA) - 3x leveraged to the Russell 2000 Index

Expense Ratio

The expense ratio for TYH is 0.95%, which is relatively high compared to other Treasury bond ETFs.

Investment Approach and Strategy

Strategy: TYH uses financial derivatives to achieve its 3x leverage objective. It does not directly hold physical Treasury bonds. Composition: The ETF's portfolio consists primarily of swaps and futures contracts on the ICE U.S. Treasury 7-10 Year Bond Index.

Key Points

• Leveraged exposure: Offers 3x the daily return of the 7-10 year Treasury bond index.
• Short-term focus: Designed for short-term trading, not long-term investment.
• Higher risk profile: Can magnify both gains and losses.

Risks

• Volatility: TYH's leveraged nature can magnify both positive and negative returns, leading to greater volatility.
• Market risk: The ETF is exposed to interest rate risk and other factors that can impact Treasury bond prices.
• Counterparty risk: TYH relies on counterparties to fulfill its derivative contracts, which could pose a risk if those counterparties default.

Who Should Consider Investing

TYH is suitable for experienced investors with a high risk tolerance who are looking for short-term, leveraged exposure to the 7-10 year Treasury bond market. It is not suitable for long-term investors or those with a low risk tolerance.

Fundamental Rating Based on AI

Rating: 6/10

While TYH offers unique exposure and potential for high returns, its leveraged nature, high expense ratio, and sensitivity to interest rate movements make it a risky investment. Its suitability is limited to a specific investor profile.

Justification:

• Strong performance in falling rate environments: AI analysis indicates a strong track record during periods of falling interest rates.
• High volatility: AI models highlight the amplified volatility associated with leveraged instruments.
• Limited market share and AUM: The AI system identifies a relatively small market share and total assets under management, indicating potential limitations in liquidity and long-term sustainability.

Resources and Disclaimers

Resources:

• Direxion Investments website: https://www.direxion.com/products/etfs/tyh/
• Yahoo Finance: https://finance.yahoo.com/quote/TYH/

Disclaimer: This information is for educational purposes only and should not be considered financial advice. Please consult with a qualified financial professional before making any investment decisions.