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Leveraged and Inverse ETFs for Bulls and Bears


In the ETF business, Direxion is best known for its turbocharged lineup of funds designed to provide 300% of the daily moves of various sectors and asset classes, on a daily basis.

ETF Trends editor Tom Lydon sits down with John Cadigan, National Sales Manager at Direxion, to discuss how traders, investors and advisors are using the ETFs.

Cadigan says Direxion is seeing more activity in the bear-oriented funds that rise when the market falls amid concern over policy making and the U.S. fiscal cliff, specifically in financials and small-caps.

He tells Lydon the firm has also experienced a big pickup in business on the commodity side.

“Our innovation is really driven by our client demand,” Cadigan said, so Direxion plans on launching more commodity funds. “We want to give people both sides of the trade. Investors and advisors are hedging more.”

Aside from leveraged and inverse funds, Direxion also offers ETFs for alternative strategies such as insider sentiment, volatility and equal weighting.

Cadigan explained the leveraged and inverse funds need to monitored closely and are designed for traders.

“Those are daily exposure products,” he said. “Because of the compounding you really don’t want to be in them for extended periods of time.”

Watch the video for the full interview.

The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.