This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Direxion Diversifies With 130/30 ETF

Direxion, the creator of Daily Financial Bull 3X (FAS), recently filed to launch a 130/30 strategy ETF to add to their leveraged product line. It's a good time for Direxion to diversify: UBS (UBS), Edward Jones and Ameriprise (AMP) have halted the sales of leveraged funds, while Morgan Stanley (MS) and Wells Fargo (WFC) currently have the funds under review.)

Leveraged funds lave been Direxion's bread and butter, sky rocketing the ETF issuer into the public and regulatory spotlight. Rather than betting on 3 times long and 3 times short pairs like Emerging Markets Bull 3X (EDC) and Emerging Markets Bear (EDZ), a 130/30 fund would combine both long and short strategies in one fund.

The 130/30 strategy has historically been used by hedge funds to outperform market returns. These funds try to outperform a benchmark by holding 130% long exposure to individual securities the manager believes will outperform the market and 30% short exposure to securities expected to fall behind the market. The result is leverage in both directions.

While Direxion was already beaten to the punch, this issuer's recent press will certainly help to gain public knowledge of the new fund. ProShares, another popular leveraged fund provider, has already launched the ProShares Credit Suisse 130/30 ETF (CSM). While the new fund has yet to gain trading traction, average volume is not anemic.

First Trust, creator of First Trust Natural Gas (FCG), also launched its own 130/30 ETN, the First Trust Enhanced 130/30 Large Cap Index (JFT), more than a year ago. Investors should continue to be aware that ETNs reflect the credit-worthiness of their exposure, adding an extra layer of risk.

Issuers like Direxion and ProShares have taken great pains to stay ahead of the regulatory juggernaut with descriptive warning labels. Both issuers warn that leveraged funds are designed for daily exposure, not long-term positions. The new 130/30 ETF would take aim at a longer time period -- these hedge fund strategies take time to play out.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,953.79 -130.01 -0.76%
S&P 500 1,977.17 -10.81 -0.54%
NASDAQ 4,439.3480 -32.76 -0.73%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs