Direxion Daily S&P 500 Bull 2X Fund (SPUU)
XMEX 
Summary
SPUU Chart
Leveraged ETF Watchlist And SPUU's Ongoing Drift
The Direxion Daily S&P 500 Bull 2X Shares ETF aims to deliver twice the daily return of the S&P 500 Index. SPUU and other leveraged ETFs experience "drift" or decay, especially in volatile or sideways markets, eroding long-term returns. Historical data shows SPUU outperforms in bull markets but suffers significant capital erosion during choppy periods due to negative drift.
Erosion Goes On For SPUU
The Direxion Daily S&P 500 Bull 2X Shares ETF offers profitable swing trading in bull markets, but its 2X leverage causes performance drift and decay, especially in volatile or sideways markets. Leveraged ETF decay is mainly due to beta-slippage, with higher leverage and volatility increasing the negative drift over time. SPUU's historical and simulated returns show that long-term outperformance over SPY is minimal, with significant drawdowns and persistent negative drift.
Leveraged ETFs Report And Focus On SPUU: Not A Long-Term Investment
Leveraged ETFs like Direxion Daily S&P 500 Bull 2X Shares ETF (SPUU) can be profitable in trending markets but suffer from beta-slippage. This article reports the drifts of 22 leveraged ETFs. Those in semiconductors show particularly large decays. SPUU's 12-month drift has been almost continuously negative since January 2022, highlighting its risk as a long-term holding.
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Direxion Daily S&P 500 Bull 2X Fund Profile
| XMEX Exchange | US Country |
Overview
The company described specializes in providing financial investment solutions with a focus on leveraging market opportunities. It primarily engages in creating investment portfolios that aim to offer twice the daily leveraged exposure to a specific index. This is achieved through a mix of financial instruments, including swap agreements, securities of the index itself, and exchange-traded funds (ETFs) that closely follow the index's performance. The strategy is to invest a minimum of 80% of its net assets, in addition to funds borrowed for investment purposes, in these instruments to meet its investment objective. Notably, the fund operates with a non-diversified investment approach, concentrating its resources to capitalize on specific financial opportunities presented by the index it targets.
Products and Services
- Swap Agreements:
Swap agreements are a key financial tool used by the fund to gain leveraged exposure to the target index. These are contracts between parties to exchange financial instruments or cash flows based on the specified index's performance, enabling the fund to amplify its investment returns relative to the daily movements of the index.
- Securities of the Indexed:
Investing in securities of the index provides the fund with direct exposure to the constituents that make up the index. This method enables the fund to closely mirror the performance of the index, leveraging the potential gains from its daily fluctuations.
- Exchange-Traded Funds (ETFs):
The fund also invests in ETFs tracking the index to achieve its leveraged investment objective. ETFs offer a flexible and efficient way to gain exposure to a broad array of assets, mirroring the performance of the index while also providing the added benefit of liquidity and diversification within the confines of a non-diversified fund structure.
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