Direxion

Last updated
Direxion
FormerlyPotomac Funds
Company typePrivate
IndustryFinance
Founded1997;28 years ago (1997) in Alexandria, Virginia, United States
ProductsLeveraged, inverse, and thematic exchange-traded funds
Website direxion.com

Direxion is an American provider of financial products known for its leveraged ETFs. Founded in Alexandria, Virginia, the company also has offices in New York City, Boston, and Hong Kong.

Contents

History

Direxion was founded in 1997 under the name Potomac Funds as a provider of mutual funds. The original name referred to the Potomac River near the company's first office in Alexandria, Virginia. [1] In November 1997, Potomac Funds became the second company to introduce an inverse mutual fund, following a similar move by Rydex Investments in 1994. [2] The company began using the Direxion name in 2006. The use of the letter "X" in the new name was intended to draw attention to the leveraged index funds in the company's offerings. That year the company also opened an office in the Prudential Tower in Boston, Massachusetts. [3]

Direxion launched its first leveraged ETFs in 2008. [4] In November 2008 the company was the first to offer ETFs with 3X leverage, a move that was copied some months later by its competitors ProShares and Rydex Investments. The move made it one of the fastest-growing ETF companies, with its sixteen 3X ETFs reaching a total of $3.4 billion in assets by April 2009. [5] [6] The move towards higher-leverage offerings by the three companies provoked scrutiny from the U.S. Securities and Exchange Commission and the Massachusetts Secretary of the Commonwealth, and a number of broker-dealers stopped selling leveraged ETFs. The criticisms centered around perceived tracking error: the ETFs were designed to achieve the stated multiple of the return on the underlying on a daily basis only (with the cost of the daily rebalancing passed on to investors in the form of higher expense ratios), but commentators suggested that some investors, even institutional investors, had mistakenly tried to use the inverse products as longer-term hedges against their underlyings. [7] [8] [9]

In December 2010, Direxion added 24 ETFs to its range of offerings, including some non-leveraged funds, and continued to expand its offering of non-leveraged funds in 2011. [10] [11] The company's gold miner bull and bear ETFs are among the most-traded gold-related leveraged ETFs. [12] [13] In February 2020, the company announced the launch of its first leveraged environmental, social and corporate governance fund, offering 150% long exposure and 50% short exposure respectively to the best- and worst-scoring companies in the MSCI USA ESG index, with a quarterly rebalance. [14] In March 2020, amidst the 2020 stock market crash, Direxion announced that it would reduce the leverage of ten of its ETFs from 3x to 2x and close eight others. [15] This was part of a broader trend among providers of leveraged ETFs during the first quarter of 2020; nevertheless, Direxion saw inflows of nearly $4 billion during March 2020 alone. [16]

List of funds

Leveraged and inverse ETFs

Direxion DailyBear 1X SharesBull 2X SharesBear 2X SharesBull 3X SharesBear 3X SharesReferences
TickerCommentsTickerCommentsTickerCommentsTickerCommentsTickerComments
S&P 500SPDN SPUU SPXL SPXS 
Mid CapMDLLLiquidated Oct. 2015MDSSRegistered, never offeredMIDU MIDZLiquidated Apr. 2020 [17] [18] [19]
Small Cap Registered, never offeredSMLL SMSSRegistered, never offeredTNA TNZ  [10] [19]
Regional BanksDPST WDRWLiquidated Apr. 2020 [17]
GoldBAR BARSLiquidated Dec. 2014 [20]
Gold Miners IndexMELTLiquidated Sep. 2017NUGT3X until May 2020DUST3X until May 2020NUGTBecame 2X in May 2020DUSTBecame 2X in May 2020 [21] [15]
Junior Gold Miners IndexJNUG3X until May 2020JDST3X until May 2020JNUGBecame 2X in May 2020JDSTBecame 2X in May 2020 [15]
Silver Miners IndexSHNYLiquidated Sep. 2018DULLLiquidated Sep. 2017 [21] [22]
EnergyERYYLiquidated Sep. 2017ERX3X until May 2020ERY3X until May 2020ERXBecame 2X in May 2020ERYBecame 2X in May 2020 [21] [15]
S&P Oil & Gas Exp. & ProdGUSH3X until May 2020DRIP3X until May 2020GUSHBecame 2X in May 2020DRIPBecame 2X in May 2020 [15]
Natural Gas RelatedGASLLiquidated Apr. 2020GASXLiquidated Apr. 2020 [17]
AgribusinessCOWLLiquidated Sep. 2012COWSLiquidated Sep. 2012 [23]
Basic MaterialsMATLLiquidated Oct. 2015MATSLiquidated Sep. 2012 [18] [23]
S&P BiotechLABSLiquidated Sep. 2017LABU LABD  [21]
Consumer StaplesSPLZLiquidated Sep. 2017NEED LACK  [21]
Cyber Security & ITHAKKLiquidated Sept. 2017HAKDLiquidated Apr. 2017 [21] [24]
FinancialsFAZZLiquidated Sep. 2017FAS FAZ  [21]
HealthcareCURE SICKLiquidated Sep. 2017 [21]
Homebuilders & SuppliesNAIL CLAWLiquidated Sep. 2017 [21]
Pharmaceutical & MedicalPILLLiquidated Apr. 2017PILSLiquidated Apr. 2017PILLRecycled ticker Registered, never offered [25]
RetailRETL RETSLiquidated Sep. 2012 [23]
SemiconductorsSOXL SOXS [ citation needed ]
TechnologyTECZLiquidated Sep. 2017TECL TECS  [21]
UtilitiesUTLZLiquidated Sep. 2017UTLL UTLSRegistered, never offered [21] [26]
BRICBRILLiquidated Sep. 2012BRISLiquidated Sep. 2012 [23]
MSCI Developed MarketsDZK DPKLiquidated Apr. 2020 [17]
FTSE EuropeEURL EURZLiquidated Sep. 2014 [20]
MSCI European FinancialsEUFSLiquidated Sep. 2017EUFLLiquidated Apr. 2020 [17] [21]
MSCI BrazilBRZU3X until May 2020BRZUBecame 2X in May 2020BRZSLiquidated Sep. 2014 [15] [20]
CSI 300 China A ShareCHAD CHAU  [27]
MSCI IndiaINDL INDZLiquidated Sep. 2012 [28]
MSCI JapanJPNL JPNSLiquidated Sep. 2014 [20] [29]
Latin AmericaLBJ LHBLiquidated Sep. 2012 [23]
MSCI MexicoMEXX  Registered, never offered [30]
RussiaRUSL3X until May 2020RUSLBecame 2X in May 2020RUSSLiquidated Apr. 2020 [15]
South KoreaKORU KORZLiquidated Sep. 2014 [20]
7-10 Year TreasurySYTLLiquidated Oct. 2015SYTSRegistered, never offeredTYD TYO  [18] [19]
Total Bond MarketSAGGLiquidated Apr. 2020 Registered, never offered Registered, never offered [10] [17]

Thematic and other funds

TickerNameCommentsReferences
ESNGDirexion MSCI USA ESG - Leaders vs. Laggards ETFRegistered in February 2020 [14]
WFHDirexion Work From Home ETFRegistered in April 2020 [31]

References

  1. ↑ "Potomac Funds Stakes Out New Direxion". Financial Planning. 2006-05-15. Retrieved 2020-05-13.
  2. ↑ Anand, Shefali (2008-03-29). "Investors Give Gloom Funds a Bear Hug". The Wall Street Journal. Archived from the original on 2020-05-13. Retrieved 2020-05-13.
  3. ↑ "Recently Rebranded Direxion Tweaks Funds". Institutional Investor. 2006-05-24. Retrieved 2020-05-12.
  4. ↑ Beerens, Marie (2019-02-01). "Direxion Expands Beyond Leveraged, Inverse ETFs With New Fund Suite". Investor's Business Daily. Retrieved 2020-05-12.
  5. ↑ "Leveraged ETFs With 300% Exposures Set To Launch". ETF.com. 2008-11-03. Retrieved 2020-05-13.
  6. ↑ Coleman, Murray (2009-04-22). "ProShares Files For 3X Leverage On 94 New ETFs". ETF.com. Retrieved 2020-05-13.
  7. ↑ Steward, Martin (September 2009). "Top gear?". IPE Magazine. Retrieved 2020-05-13.
  8. ↑ Spence, John (2010-04-13). "Leveraged ETFs Are Under SEC Scrutiny". The Wall Street Journal. Archived from the original on 2020-05-13. Retrieved 2020-05-13.
  9. ↑ Wong, Raymund (2009-11-10). "United States: Rebalancing Act: A Primer On Leveraged and Inverse ETFs". Mondaq.com. Retrieved 2020-05-13.
  10. 1 2 3 Cumman, Jared (2010-12-14). "Direxion Unveils Tidal Wave Of ETF Proposals". ETF Database. Retrieved 2020-05-12.
  11. ↑ "Direxion to expand non-leveraged ETF lineup". Reuters. 2011-11-28. Retrieved 2020-05-13.
  12. ↑ Rosenberg, Alex (2016-03-02). "The strange ETF that's doubled this year". CNBC. Retrieved 2020-05-12.
  13. ↑ Dierking, David (2020-04-16). "The 4 Most Traded 2x and 3x Gold ETFs". Investopedia. Retrieved 2020-05-12.
  14. 1 2 Temple-West, Patrick (2020-02-06). "Direxion launches high-risk sustainable investment ETF". Financial Times. Archived from the original on 2020-02-06. Retrieved 2020-05-12.
  15. 1 2 3 4 5 6 7 Ballentine, Claire (2020-03-23). "Direxion Cuts Leverage on 10 Funds to 200%, Closes Eight Others". Bloomberg News. Retrieved 2020-05-12.
  16. ↑ "Leveraged ETF Blowups Draw SEC Scrutiny Amid Market Turmoil". Bloomberg Law. 2020-04-04. Retrieved 2020-05-13.
  17. 1 2 3 4 5 6 Kiesche, Liz (2020-03-23). "Direxion cuts leverage on 10 funds, closes eight funds". Seeking Alpha. Retrieved 2020-05-12.
  18. 1 2 3 "Direxion To Close Down 3 Leveraged ETFs". Zacks.com. 2015-10-15. Archived from the original on 2015-10-16. Retrieved 2020-05-13.
  19. 1 2 3 Tran, Hung (2014-07-21). "Daily ETF Watch". ETF.com. Retrieved 2020-05-13.
  20. 1 2 3 4 5 "Direxion To Shut Down BARS, The 3x Gold Bear ETF". Seeking Alpha. 2014-12-24. Retrieved 2020-05-12.
  21. 1 2 3 4 5 6 7 8 9 10 11 12 Kim, Crystal (2017-09-05). "12 Inverse and Leveraged ETFs to Bite the Dust". Barron's. Archived from the original on 2017-09-09. Retrieved 2020-05-13.
  22. ↑ "The First Leveraged, Inverse Silver Miner ETFs". Yahoo! Finance. 2016-09-09. Retrieved 2020-05-13.
  23. 1 2 3 4 5 Rowland, Ron (2012-08-20). "Direxion Closing Nine Leveraged And Inverse ETFs". Seeking Alpha. Retrieved 2020-05-13.
  24. ↑ Dieterich, Chris (2015-07-01). "Direxion Preps for 2X Cyber Security ETFs". Barron's. Retrieved 2020-05-13.
  25. ↑ Watson, George (2017-11-15). "Direxion launches 3x leveraged pharmaceuticals ETF". ETF Strategy. Retrieved 2020-05-13.
  26. ↑ "Direxion Files for 16 New Leveraged Bull And Bear ETFs". ETF Daily News. 2010-06-28. Retrieved 2020-05-13.
  27. ↑ Fabian, David (2015-04-23). "Direxion Launches New Leveraged China A-Share ETF". Yahoo! Finance. Retrieved 2020-05-15.
  28. ↑ Magoon, Christian (2012-08-07). "This Bearish 3X India ETF Will Liquidate In September (INDZ)". ETF Daily News. Retrieved 2020-05-13.
  29. ↑ Ludwig, Olly (2013-06-26). "Direxion Debuts Bull/Bear 3X Japan ETFs". ETF.com. Retrieved 2020-05-12.
  30. ↑ "Direxion Files For 8 New Triple-Leveraged Global ETFs". Nasdaq.com. 2013-04-10. Retrieved 2020-05-13.
  31. ↑ Greifeld, Katherine (2020-04-08). "There's a Work-From-Home ETF Coming and Its Ticker is WFH". Bloomberg Quint. Archived from the original on 2020-05-14. Retrieved 2020-05-14.
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