Power Tools for Your Portfolio:

Transcription

1 Power Tools for Your Portfolio: Seven Ways to Implement Leveraged ETFs Disclosure: Leveraged and inverse ETFs pursue daily leveraged investment objectives which means they are riskier than alternatives which do not use leverage. They seek daily goals and should not be expected to track the underlying index over periods longer than one day. They are not suitable for all investors and should be utilized only by investors who understand leverage risk and who actively manage their investments.

2 Power Tools for Your Portfolio: Seven Ways to Implement Leveraged ETFs The basics: Leveraged and inverse ETFs offer powerful capabilities to potentially assist you in achieving your investment goals. Direxion Leveraged ETFs are designed to provide up to three times the return of the index they track, long or short Magnify your short-term perspective with daily 3X or 2x leverage Go where there s opportunity, with funds for both sides of the trade Stay agile with liquidity to trade through rapidly changing markets For individuals who are considering how to deploy leveraged ETFs, Direxion can be a powerful ally. Our firm draws on over 17 years of experience with highly liquid, strategic and tactical institutional-style funds. We provide a wide range of index-based products that offer magnified exposure, long and short, based on time-tested, rules-based strategies to implement your trading strategies. 1

3 #1: Reduce Your Cost Cost of of Capital Capital Leveraged ETFs assist you in achieving target allocations, with significantly less capital. ETF CHOICES REQUIRED CAPITAL TO ACHIEVE TARGET EXPOSURE Portfolio Size: $1 Million Portfolio Direxion Daily Small Cap Bull 1.25X Shares (LLSC) $80,000 Desired Allocation: 10% U.S. Small Cap Companies Direxion Daily Small Cap Bull 2X Shares (SMLL) $50,000 Direxion Daily Small Cap Bull 3X Shares (TNA) $33,333 Leveraged ETFs can provide investors equal exposure with less capital, freeing assets to be allocated elsewhere or to remain in cash. For traders, they can provide swift exposure, long or short to your target asset classes for approximately half or one third of the capital ordinarily required to achieve the same level of exposure with a non-leveraged fund. 2

4 #1: #2: Reduce Swiftly React Your to Cost Short-term of Capital Market Opportunities Three-times leverage allows you to swiftly react, deploying to opportunities as they arise. Portfolio Size: Seeking: You Need: $300,000 Portfolio To Profit Short-Term in a Belief That Small Cap Stocks are Pulling Back Rapidly To Maintain Overall Current Investment Levels and Add New Investments Strong conviction that while the market is flat, small cap stocks will decline swiftly for under two weeks Conviction is more than the $10,000 currently in cash Of note: qualified and experienced trader doesn t have shorting functions with an online broker and simply has not executed the paperwork Solution: purchase $10,000 of Direxion s Daily Small Cap Bear 3X Shares (TZA) providing $30,000 worth of inverse exposure 3

5 #1: #3: Reduce Free Cash Your in Your Cost Portfolio of Capital Leveraged ETFs can allow you to retain your desired exposure, while freeing up cash for short-term needs. Portfolio Size: Seeking: You Need: $5 Million Portfolio $5 Million Maintained Exposure At Least $200,000 Sought for a Private Investment Opportunity $200,000 in Liquidity Maintain Target Portfolio Allocation by switching one ETF to a Leveraged Equity. Current exposure to large cap stocks indexed to the S&P 500 is 20% or $1,000,000 Switch $100,000 of the ETF to the Direxion Daily S&P 500 Bull 3X Shares ETF (SPXL) = ~$300,000 of exposure $200,000 of the prior investment is now in cash Exposure is maintained to large cap stocks indexed to the S&P 500 4

6 #1: #4: Reduce Increase Your Exposures Cost of to Capital Investment Ideas Leveraged ETFs enable you to take bigger positions in market sectors without tying up cash. A Trader with a $200,000 Portfolio Fully Invested Wants to Invest in Energy Stocks that are Benefitting from Regulatory Reform at the EPA A 10% Allocation to Daily Energy Bull 3X ETF (ERX) Requires Only $6,666 in capital Shift a small portion of their core equity to SPXL Daily S&P 500 Bull 3X Shares Maintain nearly identical short-term exposure to large cap stocks Purchase $6,666 of ERX, Direxion s Daily Energy Bull 3X Shares Achieve short-term trade of high conviction idea 5

7 #1: #5: Reduce Reach Your Your Desired Cost of Exposure Capital Faster and Easier Leveraged ETFs can enable you to buy fewer shares to reach targets and transaction costs can be lower, even for hard-to-access assets. Portfolio Size: $1 Million Portfolio $10,000 into Daily Emerging Markets Bond Bull 3X Shares (EMBU) or 1/3 of the Targeted $30,000 Investment Seeking: $30,000 in Emerging Market Bond Exposure Spreads Wide, Assets Hard to Purchase Directly ETF provides three times the daily exposure to the J.P. Morgan EMBI Global Core Index Achieves diversified exposure to bonds from more than 30 countries Exchange traded liquidity facilitates simplified management of exposure 6

8 #6: Hedge Risks in any Kind of Account, #1: Reduce Even a Self-Directed Your Cost of Retirement Capital Account Inverse ETFs provide protection against market down-drafts and don t require special clearance or trading accounts. Investor Anticipates Stock Market Correction or Downside, Wants to Protect $1 Million Account Assets are in a 401(K) fund with a brokerage option no shorting allowed Direxion Leveraged and Inverse ETFs are Available A 10% position in Daily S&P 500 Bear 3X Shares (SPXS) provides downside protection With 3x leverage a 10% allocation equals 30% downside protection Potential for making money if the market goes down No special self-directed retirement account required Can be used within self-directed IRA as well 7

9 #1: #7: Reduce Adjust Positions Your Cost Quarterly of Capital (for Precision) Magnify the impact of active, tactical strategies with leveraged ETFs. A Trader with $1 Million in Cash Pursues an Active Tactical Sector Rotation Strategy Adjusts Allocation to Four Sectors Industrials, Finance, Technology and Health Care According to Quantitative Signals Leveraged ETFs enable them to achieve three times the daily returns of each index; if bearish on a sector, inverse ETFs provide three times the inverse of the indexes daily performance The impact of portfolio decisions is magnified by three; if the model works, returns should be increased approximately three times However, downside risk is also increased. This strategy is only for very experienced investors and traders 8

10 Execute Your Portfolio Strategies with Power Tools Direxion Leveraged and Inverse ETFs can increase the impact of your investment strategies and trades, achieve market exposure with lower capital outlay and enable you to implement your best trade ideas quickly and easily. Invest and trade with Direxion ETFs with any online broker or your financial advisor. For more information, please visit our website at or us at Leveraged and inverse ETFs pursue daily leveraged investment objectives which means they are riskier than alternatives which do not use leverage. They seek daily goals and should not be expected to track the underlying index over periods longer than one day. They are not suitable for all investors and should be utilized only by investors who understand leverage risk and who actively manage their investments. An investment in the ETFs involve risk, including the possible loss of principal. The ETFs are non-diversified and include risks associated with concentration that results from the Funds investments in a particular industry or sector which can increase volatility. The use of derivatives such as futures contracts, forward contracts, options and swaps are subject to market risks that may cause their price to fluctuate over time. The funds do not attempt to, and should not be expected to, provide returns which are a multiple of the return of the Index for periods other than a single day. For other risks including leverage, correlation, compounding, market volatility and specific risks regarding each sector, please read the prospectus. An investor should carefully consider a Fund s investment objective, risks, charges, and expenses before investing. A Fund s prospectus and summary prospectus contain this and other information about the Direxion Shares. To obtain a Fund s prospectus and summary prospectus call or visit our website at direxioninvestments.com. A Fund s prospectus and summary prospectus should be read carefully before investing. Distributor for Direxion Shares: Foreside Fund Services, LLC.