Direxion, the second-largest issuer of leveraged exchange traded funds, has filed plans with the Securities and Exchange Commission to possibly introduce two triple-leveraged biotechnology ETFs.
The Direxion Daily S&P Biotech Bull 3X Shares would attempt to deliver three times the daily performance of the S&P Biotechnology Select Industry Index. That is the underlying benchmark for the $2.34 billion SPDR S&P Biotech ETF (XBI) , one of the largest biotech ETFs.
According to the SEC filing, Direxion has also filed plans for the Direxion Daily S&P Biotech Bear 3X Shares. That ETF would attempt to deliver three times the daily inverse performance of the S&P Biotechnology Select Industry Index. Both the bullish and bearish leveraged biotech ETFs will charge 0.95% per year.
With biotech ETFs soaring once again this year, the Direxion Daily S&P Biotech Bull 3X Shares would likely be delivering an impressive showing if it were already trading. XBI is up nearly 26% year-to-date, making the top-performing biotech and the second-best non-leveraged ETF overall behind just the Guggenheim Solar ETF (TAN) . [The Right Time for Biotech ETFs]
XBI was 2014’s second-best non-leveraged sector ETF and the ninth-best such fund in 2012.
Assuming Direxion’s leveraged biotech ETFs come to market, they will compete with the P roShares Ultrashort Nasdaq Biotechnology (BIS) and the ProShares Ultra Nasdaq Biotechnology (BIB) . Those ETFs are the double-leveraged answers to the Nasdaq Biotechnology Index, the underlying benchmark for the iShares Nasdaq Biotechnology ETF (IBB) , the largest biotech ETF.
Direxion has already found success with leveraged healthcare ETFs. The Direxion Daily Healthcare Bull 3x Shares (CURE), the triple-leveraged answer to the Health Care Select Sector SPDR (NYSEArca: XLV), the largest health care ETF, has surged 88% over the past year on its way to amassing $300 million in assets under management. [A Cure for the Ordinary Healthcare ETF]
Direxion’s SEC filing also revealed plans for the Direxion Daily S&P Oil Services Bull 3X Shares and the Direxion Daily S&P Oil Services Bear 3X Shares. Those ETFs would use the S&P Oil & Gas Exploration & Production Select Industry Index as their underlying benchmark. That is the same index tracked by the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) .
Those leveraged ETFs would also charge 0.95% per year if they come to market.
SPDR S&P Biotech ETF
ETF Trends editorial team contributed to this post.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. 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.