If the first three quarters of 2020 have been any indication, the final three months of the year will more than likely hold its fair share of surprises. That being said, trends among Direxion’s most popular leveraged funds reveal how traders are positioning themselves heading into election season.
Perhaps unsurprisingly, traders have not lost faith in the hottest trade of the year. The Direxion Daily Technology Bull 3X Shares (TECL), which attempts to deliver 300% of the daily returns of the S&P Technology Select Sector Index, took in more than $135 million inflows during the first full week of October. That’s more than double the inflows of any other Direxion fund over that span.
This is part of a longer trend for tech. In the last four weeks TECL has taken in over $288 million, more than triple that of any other fund. It’s also worth pointing out that the Direxion Daily Technology Bear 3X Shares (TECS), which attempts to deliver -300% of the index, itself experienced $3 million of inflows in the last week and $10 million in the last month, suggesting that some tech bears remain yet.
The continued inflows into tech reflect strong trader confidence that the sector will continue to outperform. And compared to the broader indices, it has. TECL is up 16% in the last four weeks, while the S&P 500 and Russell 2000 are up 4% and 8% respectively.
But TECL has also lagged behind a number of other bullish Direxion Leveraged ETFs in recent weeks. The following bullish leveraged funds have all outperformed TECL by 50% or more in the last month: Direxion Daily S&P Biotech Bull 3x Shares (LABU), Direxion Daily Semiconductor Bull 3x Shares (SOXL), Direxion Daily Pharmaceutical & Medical Bull 3X Shares (PILL), Direxion Daily Small Cap Bull 3X Shares (TNA). Even utilities, retail, and Mexico-focused funds have outperformed the broad tech theme.
Tech’s relative weakness compared to other themes is certainly worth noting, especially in light of the continued bullish bets being placed on the sector. The spate of corporate earnings over the next few weeks will provide more insight into whether this near-term bullishness is warranted.
For standardized performance click here
The performance data quoted represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate. An investor’s shares, when redeemed, may be worth more or less than their original cost; current performance may be lower or higher than the performance quoted. Short term performance, in particular, is not a good indication of the fund’s future performance, and an investment should not be made based solely on returns. For the most recent month-end performance go to direxion.com
An investor should carefully consider a Fund’s investment objective, risks, charges, and expenses before investing. A Fund’s prospectus and summary prospectus contain this and other information about the Direxion Shares. To obtain a Fund’s prospectus and summary prospectus call 866-476-7523 or visit our website at direxion.com. A Fund’s prospectus and summary prospectus should be read carefully before investing.
Market Disruptions Resulting from COVID-19. The outbreak of COVID-19 has negatively affected the worldwide economy, individual countries, individual companies and the market in general. The future impact of COVID-19 is currently unknown, and it may exacerbate other risks that apply to the Fund.
Shares of the Direxion Shares are bought and sold at market price (not NAV) and are not individually redeemed from a Fund. Market Price returns are based upon the midpoint of the bid/ask spread at 4:00 pm EST (when NAV is normally calculated) and do not represent the returns you would receive if you traded shares at other times. Brokerage commissions will reduce returns. Fund returns assume that dividends and capital gains distributions have been reinvested in the Fund at NAV. Some performance results reflect expense reimbursements or recoupments and fee waivers in effect during certain periods shown. Absent these reimbursements or recoupments and fee waivers, results would have been less favorable.
Direxion Shares Risks - An investment in the ETFs involves risk, including the possible loss of principal. The ETFs are non-diversified and include risks associated with concentration that results from an ETF’s investments in a particular industry or sector which can increase volatility. The use of derivatives such as futures contracts and swaps are subject to market risks that may cause their price to fluctuate over time. The ETFs do not attempt to, and should not be expected to, provide returns which are a multiple of the return of their respective index for periods other than a single day. For other risks including leverage, correlation, daily compounding, market volatility and risks specific to an industry or sector, please read the prospectus.
Distributor: Foreside Fund Services, LLC.