For some trades, high beta and Internet stocks are plenty exciting in their own rights, but others may prefer to add some spice to those concepts. For those in the latter camp, Direxion has you covered with four new leveraged exchange traded funds.
Direxion, one of the largest issuers of inverse and leveraged ETFs, is kicking things up a notch for traders targeting high beta stocks with Thursday's launches of the Direxion Daily S&P 500 High Beta Bull 3X Shares (NYSE: HIBL) and the Direxion Daily S&P 500 High Beta Bear 3X Shares (NYSE: HIBS).
HIBL, the bullish fund, is designed to deliver triple the daily returns of the S&P 500 High Beta Index, a high beta derivative of the widely followed S&P 500. HIBS, the bearish counterpart to HIBL, looks to deliver triple the daily inverse returns of that benchmark.
“The Index Provider selects 100 securities to include in the Index from the S&P 500 Index that have the highest sensitivity to market movements, or 'beta' over the past 12 months as determined by the Index Provider,” according to Direxion. “Securities with the highest beta are generally the most volatile securities of the S&P 500 Index.”
That index allocates 56% of its combined weight to technology and industrial stocks.
Why It's Important
The bullish WEBL seeks results that correspond with triple the daily returns of the Dow Jones Internet Composite Index, while the bearish WEBS looks to deliver triple the daily inverse returns of that index.
That index “includes companies that generate at least 50% of their annual sales/revenue from the internet as determined by the Index Provider,” according to Direxion.
Not all leveraged ETFs have captive audiences, but plenty do, so it remains to be seen what fate awaits the aforementioned funds.
In the case of WEBL and WEBS, the new leveraged internet ETFs, traders could embrace those products because beloved stocks, such as Amazon.com, Inc. (NASDAQ: AMZN) and Facebook Inc. (NASDAQ: FB) command large portions of those ETFs' underlying index.