HCMT Profile
Direxion Shares ETF Trust - Direxion HCM Tactical Enhanced US ETF is a fund-of-funds designed to offer enhanced returns by strategically allocating investments between U.S. equities and cash or cash equivalents. The fund employs a proprietary quantitative model to guide its investment decisions, leveraging the HCM-BuyLine indicator, which analyzes technical factors to discern broad market trends. This model determines whether to allocate assets to equities or cash based on whether the S&P 500 Index closes above or below specified thresholds relative to the HCM-BuyLine.
The fund's investment strategy involves a dynamic allocation approach. During periods identified as upward trends, characterized by the S&P 500 Index closing above the HCM-BuyLine for five consecutive days or more, the fund invests in a mix of stocks, ETFs, and derivatives. It aims to achieve daily leveraged exposures of approximately 80% to the S&P 500 Index, 80% to the NASDAQ-100 Index, and up to 40% in sector-specific allocations. The selection of sectors is based on a proprietary relative strength formula, which identifies the sector with the strongest market trend for potential investment.
In contrast, during downward trends, when the S&P 500 Index falls below the HCM-BuyLine's threshold, the fund shifts its focus entirely to cash or cash equivalents. This strategy is intended to preserve capital by avoiding potential losses during declining market conditions. The fund's allocation to cash or cash equivalents is a defensive measure designed to minimize risk and protect investor capital during adverse market phases.
As an actively managed fund, the Direxion HCM Tactical Enhanced US ETF can rebalance its portfolio on a daily basis when invested in U.S. equities. This flexibility allows the fund to respond quickly to changing market conditions and trends, aiming to optimize returns across various market cycles. The tactical nature of the fund's investment strategy reflects its objective to enhance returns while managing risk through a systematic approach based on market trends and technical indicators.
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