UTSL Profile
The Direxion Daily Utilities Bull 3X Shares is an actively managed exchange-traded fund (ETF) designed to deliver triple the daily return of its benchmark index, which comprises companies in the U.S. utilities sector. To achieve this leveraged exposure, the fund allocates at least 80% of its net assets, including any borrowed funds, to a range of financial instruments. These include swap agreements, securities that are part of the index, and ETFs that mirror the performance of the index. The use of these instruments allows the fund to amplify its exposure to the index's daily movements by three times.
The underlying index includes a broad array of companies within the utilities sector, which encompasses various industries such as electric utilities, multi-utilities, and water utilities, among others. This sector is characterized by its stable cash flows and regulatory environments, which provide a consistent revenue base for utility companies. The fund's focus on these sectors aims to capitalize on the sector's performance, using leverage to potentially enhance returns relative to the index's daily performance.
As a leveraged fund, the Direxion Daily Utilities Bull 3X Shares employs strategies that involve borrowing and financial derivatives to magnify the index's returns. This approach entails significant risks, including the potential for greater volatility and losses, especially in volatile or declining markets. The fund's leveraged nature means that its performance can diverge significantly from the index over longer periods due to the effects of compounding.
The fund is non-diversified, meaning it may concentrate its investments in a specific sectorâ€utilities in this case. This focus can lead to increased exposure to the risks associated with the utilities sector, including regulatory changes, economic fluctuations, and sector-specific developments. Investors should be aware of the heightened risk associated with leveraged funds and consider their investment objectives and risk tolerance before investing.
|
