Direxion Daily TSM Bear 1X Shares (TSMZ)

Overview

The Direxion Daily TSM Bear 1X Shares (TSMS) seeks daily investment results, before fees and expenses, of 100% of the inverse (or opposite) of the daily performance of the Russell 2000u00ae Index. It provides a way for investors to potentially profit from a decline in the small-cap sector. The asset allocation is primarily focused on financial derivative instruments designed to produce the desired inverse exposure.

Reputation and Reliability

Direxion is a well-known provider of leveraged and inverse ETFs. They have a strong track record of offering these specialized products, though the nature of leveraged/inverse ETFs carries inherent risks.

Management Expertise

Direxion's management team has experience in managing leveraged and inverse ETFs, requiring expertise in financial derivatives and risk management.

Goal

To seek daily investment results, before fees and expenses, of 100% of the inverse (or opposite) of the daily performance of the Russell 2000u00ae Index.

Investment Approach and Strategy

Strategy: TSMS uses financial derivative instruments, primarily swaps, to achieve its inverse exposure to the Russell 2000u00ae Index on a daily basis.

Composition The ETF holds a combination of swap agreements, cash, and potentially other financial instruments to achieve its investment objective. The portfolio composition is dynamically managed to maintain the 1x inverse exposure.

Market Share: TSMS has a smaller market share compared to broader market ETFs and even other inverse small-cap ETFs, reflecting its niche application.

Total Net Assets (AUM): 36820000

Key Competitors

• SH
• PSQ
• RWM

Competitive Landscape

The competitive landscape includes various inverse ETFs, with SH being the largest. TSMS's competitive edge lies in its specific focus on the Russell 2000 with a 1x inverse exposure. Its disadvantage is the daily reset, which can lead to performance decay over longer periods. It is generally more niche, therefore lower AUM.

Historical Performance: Historical performance will reflect the inverse of the Russell 2000u00ae Index's daily performance, with significant fluctuations. Due to the daily reset, long-term performance can deviate significantly from a simple inverse relationship.

Benchmark Comparison: The ETF's performance should be compared to the inverse of the Russell 2000u00ae Index on a daily basis. Tracking error can occur due to fees, expenses, and imperfect correlation of the derivative instruments.

Expense Ratio: 0.95

Average Trading Volume

The ETF's liquidity is moderate, but sufficient for most retail traders, however, institutional investors must be careful entering and exiting positions.

Bid-Ask Spread

The bid-ask spread can vary depending on market conditions and trading volume; monitor the spread before trading.

Market Environment Factors

Economic indicators, investor sentiment, and overall market volatility influence the demand for inverse ETFs like TSMS. Downward trends in the small-cap sector of the stock market generally benefit TSMS.

Growth Trajectory

The growth trajectory of TSMS is tied to the performance of the Russell 2000u00ae Index and investor demand for inverse exposure. Changes in the portfolio may occur to optimize the inverse tracking.

Competitive Edge

TSMS offers a direct and relatively straightforward way to gain inverse exposure to the Russell 2000u00ae Index on a daily basis. This targeted approach can be appealing to investors with specific bearish views on small-cap stocks. However, the daily reset mechanism distinguishes it from simple inverse ETFs. The ETF's focus allows it to cater to investors with very short term bearish sentiment. It's not designed for long-term investment.

Volatility

TSMS is inherently volatile due to its leveraged nature and the volatility of the Russell 2000u00ae Index. Expect large price swings.

Market Risk

The primary risk is that the Russell 2000u00ae Index will rise, leading to losses for TSMS investors. Compounding and daily resets can result in performance significantly different from the simple inverse of the index over longer periods.

Ideal Investor Profile

The ideal investor is a sophisticated trader with a short-term bearish outlook on the Russell 2000u00ae Index. This ETF is not suitable for buy-and-hold investors.

Market Risk

TSMS is best suited for active traders seeking to profit from short-term declines in the Russell 2000u00ae Index. It is unsuitable for long-term investors or passive index followers.

The Direxion Daily TSM Bear 1X Shares (TSMS) provides a tool for sophisticated investors to profit from short-term declines in the Russell 2000u00ae Index. It uses a daily reset mechanism, making it unsuitable for long-term holding. Its returns are affected by the volatile nature of the markets, and the compounding effect on daily movements. It is best utilized by experienced traders with a clear bearish strategy for small-cap stocks.

Data Sources:

• Direxion website
• ETF.com
• Yahoo Finance

Disclaimers:

This analysis is for informational purposes only and does not constitute financial advice. Leveraged and inverse ETFs are complex instruments and involve significant risk. Past performance is not indicative of future results. Consult with a financial advisor before making any investment decisions.