June 4, 2012 (AAPLTrader)

The Direxion Financial Bear 3x Shares (NYSE: FAZ) started their IPO in the New York Stock Exchange on November 6, 2008.

Direxion Shares are leveraged Exchange-Traded Funds (ETFs) designed to seek daily investment results, before fees and expenses, of 300% of the performance (or 300% of the inverse of the performance, in the case of a bear fund), of the benchmark index that they track.

FAZ is family to the financials and is designed to yield investment results approximately equivalent to triple (300%) the inverse of the return of an investment in the Russell 1000 Financials Index, which tracks financial-related securities in the Russell 1000 Index. However, there is no guarantee the fund will meet its stated investment objective.

Here’s an example; if the underlying index gains 1%, this fund should decline in value approximately 3%.

The FAZ is designed to be utilized only by sophisticated investors, such as traders and active investors employing dynamic strategies. If you are trading this ETF than you must be aware that you are expected to monitor and manage their portfolios frequently.

The Russell 1000 Financial Services index also has the opposite of FAZ, called the FAS (NYSE: FAS) which is a 3x bullish ETF. This ETF seeks daily investment results, before fees and expenses, of 300% of the performance of the Russell 1000 Financial Index.

The Russell Indexes are constructed to provide a comprehensive and unbiased barometer of the market cap segment they represent with no gaps or overlaps in coverage.

• The Russell 1000 measures the large cap segment of the US equity universe.


• The Russell 2000 measures the small cap segment of the US equity universe and includes the smallest 2,000 securities in the Russell 3000 Index based on market cap.


• The Russell 1000 Energy measures the performance of all energy related securities in the Russell 1000 Index.


• Russell 1000 Financial Services measures the performance of all financial services related securities in the Russell 1000 Index.

These indexes above are not managed and cannot be invested in directly.

Is Direxion Shares a good game plan for you?

Yes, if you are a sophisticated and aggressive trader and:

• Are able to accept substantial losses in short periods of time.


• Have an understanding of the unique nature and performance characteristics of funds which seek leveraged daily investment results.


• Have the time and attention to manage your positions frequently to respond to changing market conditions and fund performance.

No, if you are a conservative investor who:

• Cannot tolerate substantial or even complete losses in short periods of time.


• Is unfamiliar with the unique nature and performance characteristics of funds which seek leveraged daily investment results.


• Is unable to manage your portfolio actively and make changes as market conditions and fund performance dictate.

 

Eric Consiglio – AAPLTrader.com