For investors seeking momentum, Direxion Daily S&P 500 Bull 3X Shares SPXL is probably on radar now. The fund just hit a 52-week high and is up nearly 13.2% from its 52-week low price of $31.26/share.
But are more gains in store for this ETF? Let’s take a quick look at the fund and the near-term outlook on it to get a better idea on where it might be headed:
SPXL in Focus
This fund creates a three times (3x) leveraged long position in the S&P 500 Index while charging 95 bps in fees a year. It has $582.7 million in AUM and trades in heavy volume of around 2.6 million shares on average (see: all the Leveraged Equity ETFs here).
Why the Move?
The U.S. equity market has been an area to watch lately given that the stocks are on fire and continuously scaling new highs downplaying all political concerns and rounds of weak economic data. This indicates that the eight-year old bull run still has legs. A large number of companies are moving higher with most of them hitting fresh highs lately confirming that the bulls are in control. In such a scenario, leveraged ETFs lead to huge gains in a very short spell.
More Gains Ahead?
The fund might remain strong given a high weighted alpha of 72.86% and a low 20-day volatility of 14.51%. As a result, there is still some promise for investors who want to ride on this surging ETF. However, it is extremely volatile and suitable only for short-term traders. Additionally, the daily rebalancing – when combined with leverage – may make this product deviate significantly from the expected long-term performance figures.
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DIRX-LC BULL 3X (SPXL): ETF Research Reports
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