Direxion Daily Dow Jones Internet Bear 3X Shares (WEBS)

Overview

The Direxion Daily Dow Jones Internet Bear 3X Shares (WEBS) seeks daily investment results, before fees and expenses, of 300% of the inverse (or opposite) of the daily performance of the Dow Jones Internet Composite Index. It targets the internet sector and uses leverage to amplify returns. It is designed for short-term trading and not for long-term investment.

Reputation and Reliability

Direxion is a well-known issuer of leveraged and inverse ETFs. They are generally considered reliable but their products are complex and risky.

Management Expertise

Direxion has extensive experience in managing leveraged and inverse ETFs, requiring specialized knowledge in derivatives and risk management.

Goal

To seek daily investment results, before fees and expenses, of 300% of the inverse (or opposite) of the daily performance of the Dow Jones Internet Composite Index.

Investment Approach and Strategy

Strategy: The ETF uses a leveraged inverse strategy to achieve its objective. It utilizes financial instruments such as swaps, futures contracts, and other derivatives.

Composition The ETF does not hold physical stocks. It primarily uses derivatives to achieve its inverse leveraged exposure to the Dow Jones Internet Composite Index.

Market Share: WEBS holds a portion of the market share within the leveraged/inverse sector-specific ETF market.

Total Net Assets (AUM): 39000000

Key Competitors

• ProShares UltraShort Technology (REK)
• ProShares UltraShort Consumer Goods (SZK)
• ProShares Short QQQ (PSQ)

Competitive Landscape

The leveraged and inverse ETF market is competitive, with several providers offering similar products. WEBS competes with other leveraged and inverse ETFs, often differing slightly in index tracked or leverage ratio. Advantages may include a narrower sector focus than competitors, while disadvantages include higher volatility and the risk of significant losses due to leverage compared to non-leveraged funds.

Historical Performance: Historical performance is highly volatile and varies significantly based on short-term market fluctuations. Past performance is not indicative of future results. The leveraged nature makes it unsuitable for long-term 'buy and hold' strategies.

Benchmark Comparison: The ETF's performance aims to be -3x the daily performance of the Dow Jones Internet Composite Index, but tracking error and compounding effects can cause deviations over longer periods.

Expense Ratio: 1.31

Average Trading Volume

The ETF's average trading volume indicates moderate liquidity, allowing investors to buy and sell shares without significantly impacting the price.

Bid-Ask Spread

The bid-ask spread indicates the cost of trading the ETF, and while it fluctuates with market conditions and time of day, it is generally wide.

Market Environment Factors

Economic indicators, interest rate changes, and market sentiment all affect the performance of the internet sector and, consequently, WEBS. Geopolitical events and technological advancements also play a role.

Growth Trajectory

The ETF's growth trajectory is dependent on investor appetite for shorting the internet sector and leveraging returns. There are no major strategy or holdings changes expected other than rebalancing to maintain the -3x daily leverage.

Competitive Edge

WEBS's primary advantage is its targeted exposure to the inverse performance of the internet sector with a 3x leverage. This allows investors to make highly leveraged bets against internet stocks. The fund's management team offers expertise in using derivatives to meet fund objectives. This strategy is well-suited for investors with a high-risk tolerance and a bearish outlook on the internet sector. The ETF can also serve as a hedging instrument during market downturns.

Volatility

WEBS exhibits very high volatility due to its leveraged nature, meaning it can experience sharp price swings in both directions.

Market Risk

The ETF is subject to market risk associated with the internet sector and the broader equity market. Specific risks include volatility, compounding, and the potential for significant losses due to leverage.

Ideal Investor Profile

The ideal investor is a sophisticated, short-term trader with a high-risk tolerance and a bearish outlook on the internet sector. They should have a deep understanding of leveraged ETFs and the risks involved.

Market Risk

WEBS is best suited for active traders seeking short-term tactical opportunities. It is not suitable for long-term investors or passive index followers.

Direxion Daily Dow Jones Internet Bear 3X Shares (WEBS) is a leveraged inverse ETF designed for short-term trading and offers exposure to the inverse performance of the internet sector. It is a high-risk investment due to its leveraged nature and is intended for sophisticated investors. WEBS is best suited for those with a bearish outlook on the internet sector and a high risk tolerance. Investors should carefully consider the risks and understand the fund's investment strategy before investing.

Data Sources:

• Direxion Investments
• FactSet
• Morningstar
• Bloomberg

Disclaimers:

The data and analysis provided are for informational purposes only and should not be considered investment advice. Investing in leveraged ETFs involves significant risks, including the potential for substantial losses. Past performance is not indicative of future results.