Leveraged exchange traded funds (ETFs) have some nifty tickers. In the case of one leveraged fund, aggressive traders may want to consider doing the opposite of what the ticker implies.
With investors departing traditional regional bank ETFs, the Direxion Daily Regional Banks Bear 3X Shares (NYSE: WDRW) could be worth making a deposit with, not withdrawing from.
WDRW aims to deliver triple the daily inverse performance of the S&P Regional Banks Select Industry Index (SPSIRBKT). Historically, regional banks have been positively correlated to rising interest rates, but the S&P Regional Banks Select Industry Index is disappointing on that front this year.
Even with the benefit of three interest rate hikes by the Federal Reserve, the S&P Regional Banks Select Industry Index is lower by 5.50 percent this year. Underscoring weakness in regional banks, that index modestly declined Monday even as the broader market surged.
Why It's Important
The SPDR S&P Regional Banking ETF (NYSE: KRE) is the non-leveraged ETF tracking the S&P Regional Banks Select Industry Index. Data suggest investors are growing increasingly dissatisfied with KRE.
“Investors pulled $547 million from the $4 billion SPDR S&P Regional Banking ETF, ticker KRE, in November, its biggest monthly outflow since January 2015 and the second straight month of net withdrawals,” according to Bloomberg.
While regional bank stocks are declining and investors are departing KRE, WDRW is going overlooked at a time when that should not be the case. The bearish leveraged regional bank ETF saw no inflows or outflows last month, according to Direxion data.
There are some indications that WDRW's bullish counterpart, the Direxion Daily Regional Banks Bull 3X Shares (NYSE: DPST), remains in favor with traders. WDRW looks to deliver triple the daily performance of the S&P Regional Banks Select Industry Index.
Last month, the bullish DPST averaged daily inflows of more than $96,600, according to issuer data.
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