Who knew that leveraged exchange-traded funds could be long-term investments?
According to Direxion, the half dozen 1.25x leveraged ETFs it has rolled out are built to be long-term holdings that potentially provide a boost to traditional asset allocation strategies by providing 25% additional exposure to broad-based equity indexes, along with one fixed-income product. The expense ratios for these funds range from 0.30% to 0.49%.
Direxion is known primarily for its extensive lineup of 2x and 3x leveraged funds primarily used as short-term tactical trading tools by institutional money managers, hedge funds and active self-directed retail investors. But the company says its new suite of 1.25x Portfolio+ ETFs target a different base of users who subscribe to passive investing and do so via ETFs—a target market that includes financial advisors.
In simple terms, these ETFs enable investors to get $1.25 worth of daily exposure to a benchmark index for every $1.00 invested. Direxion says this product structure brings little change to a portfolio’s risk profile.
According to Direxion, these are not funds aimed at “set it and forget it” types. Rather, they’re for investors who monitor their portfolios and believe they can benefit from “manageable” levels of added daily exposure.
Davis Expands Actively Managed ETF Lineup
The Davis Select International ETF (DINT) is the fourth actively managed exchange-traded fund from New York City-based money manager Davis Advisors.
The fund is market-cap agnostic and will invest in companies with businesses outside of the U.S. The net expense ratio is 0.75%, and the fund is managed by Danton Goei, who joined Davis Advisors in 1998.
DINT is the ETF version of the Davis International Fund. That mutual fund had $289 million in assets through the first quarter, and at the end of 2017 it had nearly half its portfolio invested in Asia and 32% in Europe.