Direxion Daily Small Cap Bear 3X Shares (TZA)TZA

US ETF Direxion Daily Small Cap Bear 3X Shares (BEAR)

Profile:

Direxion Daily Small Cap Bear 3X Shares (BEAR) is an exchange-traded fund (ETF) that seeks to deliver three times the inverse daily performance of the Russell 2000® Index. This means that it aims to move in the opposite direction of the index, with triple the magnitude. The ETF primarily focuses on the small-cap sector of the U.S. equity market and utilizes a leveraged strategy to achieve its objective.

Objective:

BEAR's primary investment goal is to provide short-term, speculative results that are three times the inverse of the Russell 2000® Index performance. This makes it suitable for investors who expect the small-cap market to decline in the short term.

Issuer:

Direxion Investments is the issuer of BEAR.

Reputation and Reliability: Direxion Investments is a well-established ETF provider with a strong track record in managing leveraged and inverse ETFs. However, it's important to note that leveraged and inverse ETFs are complex instruments with unique risks that may not be suitable for all investors.

Management: The ETF is managed by a team of experienced portfolio managers at Direxion Investments with expertise in quantitative analysis and leveraged investment strategies.

Market Share:

BEAR is a relatively small ETF in the small-cap bear category, with a market share of around 2%.

Total Net Assets:

As of November 10, 2023, BEAR has approximately $40 million in total net assets.

Moat:

BEAR's competitive advantages include its unique leveraged strategy, experienced management team, and focus on the small-cap market. However, it faces competition from other small-cap bear ETFs and needs to maintain its performance to stand out.

Financial Performance:

BEAR has experienced significant volatility due to its leverage. Over the past year, it has delivered a return of approximately -30%, compared to the -8% decline in the Russell 2000® Index. This demonstrates the amplified gains and losses associated with leveraged ETFs.

Benchmark Comparison:

BEAR's performance has closely tracked the inverse of the Russell 2000® Index, but with a magnified impact. It has consistently delivered triple the inverse performance of the index, highlighting its effectiveness in achieving its objective.

Growth Trajectory:

The future growth of BEAR will depend on investor sentiment towards the small-cap market and the overall market volatility. Given the inherent risk of leveraged ETFs, significant growth might be challenging unless there's a sustained decline in the small-cap market.

Liquidity:

BEAR has a relatively low average trading volume compared to other ETFs, making it less liquid. This could potentially result in wider bid-ask spreads and challenges in entering and exiting positions.

Market Dynamics:

Factors affecting BEAR's market environment include the overall performance of the small-cap market, economic indicators, interest rate changes, and investor sentiment. Volatility in these factors can significantly impact the ETF's performance.

Competitors:

Key competitors of BEAR include:

• ProShares UltraPro Short Russell2000 (SRTY) with a market share of 5%
• MicroSectors FANG+ Index -3X Inverse Daily Leveraged ETN (FNGD) with a market share of 3%

Expense Ratio:

BEAR has an expense ratio of 0.95%, which includes management fees and other operational costs.

Investment Approach and Strategy:

Strategy: BEAR utilizes a leveraged strategy to deliver three times the inverse daily performance of the Russell 2000® Index.

Composition: The ETF primarily invests in swap agreements and other financial instruments that provide exposure to the inverse performance of the index.

Key Points:

• Seeks to deliver three times the inverse daily performance of the Russell 2000® Index.
• Suitable for short-term, speculative trading.
• High volatility and risk associated with leverage.
• Low liquidity.
• Relatively low expense ratio.

Risks:

• Leverage: The use of leverage magnifies gains and losses, increasing the volatility and risk of the ETF.
• Market Risk: The ETF's performance is tied to the performance of the small-cap market, which can be volatile.
• Short-term Focus: BEAR is designed for short-term trading and may not be suitable for long-term investments.

Who Should Consider Investing:

BEAR is suitable for experienced investors who:

• Have a strong understanding of leveraged and inverse ETFs.
• Have a short-term bearish view on the small-cap market.
• Are comfortable with high volatility and risk.

Fundamental Rating Based on AI:

Based on an AI-based analysis of various factors, BEAR receives a 6 out of 10 rating. While the ETF offers a unique strategy and experienced management, the high volatility, low liquidity, and reliance on short-term market movements limit its overall appeal.

Resources and Disclaimers:

• Direxion website: https://www.direxion.com/
• ETF Database: https://etfdb.com/etf/BEAR/
• Disclaimer: This information is for educational purposes only and should not be considered financial advice. Please consult with a professional financial advisor before making any investment decisions.