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Fascination With Triple Levered ETFs Ends: Direxion Closing Nine 3x ETFs Due To Lack Of Interest
It was fun (not really) while it lasted, but America's habitual gamblers have finally grown tired of the theta sucking monsters known as uber-levered ETFs. End result: Direxion is announcing it is closing nine 3X levered ETFs.
From Direxion:
The Board of Trustees of the Direxion Shares ETF Trust has decided to liquidate and shutter nine exchange-traded funds ("Funds") based on the recommendation of Rafferty Asset Management, LLC, the Trust's advisor.
Due to the Funds' inability to attract sufficient investment assets, Rafferty believes they cannot continue to conduct their business and operations in an economically efficient manner. As a result, the Board concluded that liquidating and shuttering the Funds would be in the best interests of the Funds and their shareholders.
The Trust will close the following Funds: Direxion Daily Agribusiness Bull 3X Shares (COWL), Direxion Daily Agribusiness Bear 3X Shares (COWS), Direxion Daily Basic Materials Bear 3X Shares (MATS), Direxion Daily BRIC Bull 3X Shares (BRIL), Direxion Daily BRIC Bear 3X Shares (BRIS), Direxion Daily Healthcare Bear 3X Shares (SICK), Direxion Daily India Bear 3X Shares (INDZ), Direxion Daily Latin America Bear 3X Shares (LHB) and Direxion Daily Retail Bear 3X Shares (RETS).
And to think they all had such memorable names...
What happens next:
Shares of the Funds will stop trading on the NYSE Arca, Inc., and will no longer be open to purchase by investors, at the close of regular trading on September 5, 2012. Shareholders may sell their holdings in the Funds prior to the closing date, and those transactions are subject to customary brokerage charges. Between the closing date and the liquidation date, shareholders may only be able to sell their shares to certain broker-dealers and there is no assurance that there will be a market for the Funds during that time period.
On September 12, 2012, the Funds will liquidate their assets and distribute cash pro rata to shareholders who have not previously redeemed or exchanged their shares. These payments are taxable and will include any accrued capital gains and dividends. Each Fund's net asset value will reflect the costs of closing the Fund as calculated on the liquidation date. The Funds will close when the distributions are complete.
The process of closing down and liquidating the Funds' portfolios, scheduled to take place between September 5, 2012 and September 12, 2012, will result in the Funds not tracking their underlying indexes and experiencing an increase in cash holdings. These developments may not be consistent with each Fund's investment objective and strategy.
Following the disappearance of 3x ETFs as an asset class we will see the exit stage left of 2x levered ETFs, then unlevered ETFs, especially if key ETF market maker Knight folds, then finally single name stocks, as nobody is left to trade anything or hold the bag, and as no incremental capital remains to be "invested" into the stock market by the greater fool.
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When is 1,000,000 Levereged SLV Closing?
How about DUST and NUGT? LOL!
It's easy to assume that there are more PHYSICAL ounces of paper stacked against PHYSICAL ounces of silver as we speak...
~~~
So... all you 'market' homos... Step up to the plate & make your bets... Go ahead... Be BRAVE... I'm on the edge of my seat to see how it's going to turn out...
Hell, even Cramer railed against the triple-stupid/levered ETF complex.
"We therefore commit these bodies to the deep..."
Wait, Osama bin Laden was tripled-levered?
Touche.
The only thing 3x levered were the losses. All those levered funds are dogs. I like the part about capital gains, like there will be a ton of those. Yet another group of investors gets a deracination.
They are designed to melt down. Retail can't short, so only a handful of players can profit from the death.
Be interesting to see how those customary brokerage charges and costs to liquidate the funds stack up.
I imagine it will be like a bankruptcy, where the liqudators burn through most of the remaining funds and the muppets get reamed ;o)
Cramer needs to join them in a dirt nap.
"Dust thou art, and unto dust thou shalt return"
(Genesis 3:19),
Can't we see they have captured a large portion of the the retired and suckers money, liquidity is drying up. They bankrupt Knight, shutter these funds and will shutter more. It's consolidation time for the oligarchs, they desire control and will defile this market until it breaks.
It seems as if the 'L' side of my P&L has been fascinated with them since April...
Concert cancelled due to lack of advertising funds
You mean people aren't interested in a product that gets you creamed if the index goes against you,but it doesn't participate when you are on the right side of the call? Who would have thunk it?
Shorters are disappointed. Remember the short AGQ, long ZSL play? Guaranteed to make money - not that I've done it, but in theory it should be a winner.
ETFs are such a joke. The inverse ones were just bizarro land. Levered ETFs had the same and worse problems as the inverse ones. Just a play to extract money from fools, pretty much.
Agreed, but interesting how frequently (as we've seen in other contexts in recent years), the fools turn out to be the "sophisticated" institutional investors, not retail.
I think bribery of institutional investors is endemic, plenty of examples to be found and knowing how efficient financial policing is they can only be a very small tip of the iceberg.
Hell, maybey they can even convince themselves it isn't bribery at all ... rich folk aren't like normal people after all.
"The three asset managers charged with bribing Gloor pleaded not guilty, saying they had paid him money solely as "gestures of friendship" or out of "gratefulness", but never in return for favours, the NZZ said."
Wynter Benton went long AGQ and made a killing, I hear.
Aero, you are obviously not an active trader.
Time decay, bitchez. And the mathematical reality that if something goes down 33%, it has to go up 50% to get back to break even. Using a "Buy and Hold" strategy with leveraged ETFs is only for the brain-dead.
Yes, and you don't even have to do the math to figure it out - anybody looking at the charts could see it.
Yep.
Why don't you go buy some nylons, faggot.
This violates the golden rule of the ETF industry: if you reserve a cutesy enough ticker, you're guaranteed to succeed!
Fuck Gartman and his shitty ONN ETF. NASDAQ misinterpreted ONNN (ON Semiconductor) as ONN and I ended up losing 50 bucks on that gaffe.
ULE needs to join this list.
3x BULLISH!!!!!!!!!!
Wow, maybe I can get in on this. I need some Alpha. Using my client's money, of course.
- John Corzine.
wowser! theta sucking monsters!
a triple lindy of triple lindy fails!
their erexion has lost its direxion, BiCheZ!
[we may soon hear of criminal investigation; the treble-damage civil fraud suits will contain specific language allegating frequent and repeated triple COW-tipping at the close...]
+ a million...
<< there is no assurance that there will be a market for the Funds during that time period.>>
Sounds 'Bullish' to me.
been my experience that yes its true .. You really dont need certain sectors. Lets face the emerging markets trade the same as the US equity markets so they seem redundant to me. I could be wrong but you can trash them for all the degradation you want. I just look at them like options without the expirations? I know very little here so please if someone can lash me and correct me please do .
But I thought owning something that is supposed to own part of something else that derives its price based on the movement of something that it might not own but may be tied to the movement of something else owned by someone else, was a good thing.
I refuse to gamble on bullcows and bearcows and briccows because that seems stupid after drinking.
Meh. I don't think they're going to be closing the TZAs or SKFs anytime soon.
There is nothing wrong with x3 ETFs or x50 ETFs for that matter unless you understand one basic thing: These things are intended for ultra short term, preferably intraday trading and are aimed at experienced/professional traders, of perfect market timers.
At some point down the line, some "investment advisers" started putting them in client portfolios and recommending to hold them long term. I am at a loss for words at the standard required to become a licensed investment adviser here. They are completely oblivious to the function of the leveraging mechanism involved in these gizmos and how it relates to NAV. Same for Inverse ETFs. An inverse position is A LEVERED POSITION. Stop looking stupid when you get pounded by these things, they don't work the way you think. At least not in buy and hold mode as many crackpots in the industry will try to tell you.
BTW food for thought: Under high contango conditions, is your "1:1" six month commodity futures ETF levered?
Ask your "investment adviser" .
PS:If you don't understand what this rant is about stay away from these things. If you do then you know not to touch these things.
What about binary options? Can I touch them?
All or nothing intraday bet. Do you feel lucky?
Even Charles Nenner has been recommending TBT long-term.
I disagree. What you said is probably what they claimed in the prospectus, but the reality is they were targeted at gullible retail, who often didn't understand the math the creates the longer-term decay. And I'm sure many (most?) investment advisors didn't help the situation by providing clarification to their customers.
If you get a prospectus. They don't even bother to send you a prospectus in Canada.
Agreed. They are very volatile. You can swing trade them if you are good. You have to pay very close attention like a day trade or options and it "ain't" easy.
The TMF or 3x 30 uear T Bond is looking shaky. If we have a correction in bonds - a lot of people are gonna get hurt.
It is weird how they decided to shut em down the day after Knight immolates over a 30 minute lunch time.
So who's supposed to hold the bag at the end of the day?
Given that everything is so tightly correlated across every asset class, all these funds should be replaced with a coin flip based on what comes out of the Fed/ECB's mouth.
50 50! Hahahaha. That's a good one!
please. call me an idiot. and i dont ever want to chart my winnings to anyone here. its just for the sake of argument. Last april i pitched most every long i had and just built a TZA position up till june. I dont know. A + 40% in three months didnt seem so bad but i know., even a blind squirrel finds a nut. I swing trade, so i got lucky
Guess they are still making too much money screwing their customers on the infamous TfuckinVix ETN. m'fers. It is a bargain today at 3 bucks a pop. Get it while you can.
Anyhow who wants to be in stocks when you can be out having fun in a civil fucking war.
That's it I'm going back to listen to PrisonPlanet.com
what a shame, another door for me to lose money is closed!
Nice, real nice way of saying "We ran ouf of suckers". LOL
How much market volume is due to ETFs buying and selling? Especially on ramp days like today.
So the muppets stopped playing but the maintenance costs of the ETF vehicles are still a factor.
Fuck you Proshares and Direxion!
Abomination of some unholy Wall Street banker and broker marriage.
As long as the FAZmobile is still burning, er, rubber, all will be well.
http://www.forbes.com/sites/etfchannel/2012/08/03/faz-large-inflows-dete...
COWL became a hermit, COWS went tits-up, MATS was down for the count, BRIS took too much off the tip, SICK was totally not well, and INDZ endedz.
I had fun. Did you?
Now, if we could just get them to shut down and liquidate OBMA, HLDR and CRZN we'd be all good.
Shouldn't there be some arbitrageable short covering rallies in these things, especially the inverse ones?
that's it, i'm going "all in" in DOGS - 5x inverse shit
No 10x inverese. More volatility is what we need.
Think of the fortune Government could be making if they had a "trading tax"!
The play with leveraged ETF's is to short and hold...let the magic of leverage chewing away share value over the long run work to your favor. My favorite play is to hedge the SLV by shorting the USLV. Works like a charm!!
Wow, I feel pretty good here. I have been in the markets for a long time and I never even heard of any of those ETFs. Maybe I am doing something right. LOL>
SOOL: + infinity today.
Hilarious.
Nearly 4 years after the outright collapse of the entire financial system, the street is still dreaming up new trippple whammy items for the speculators. They get rid of 9 today, there will be at least 25 new ones before Christmas.
More evidence that being a bear has been a bitch.
Irks me when CapitalContext doesn't close out the thieving day. Looked like mass exits before some BTFDer came in at close. Did VIX drop due to more cash exiting?
Jump you Fuckers.
Or, if you don't want to jump, word on the street is that there aren't enough Mexicans to mow the lawns and clean the latrines. I'm sure if you are hard working you'll be wanted somewhere.
Mexico is growing faster and their stock market is performing better than ours. Please congratulate Mr. Cheap Oil Nafta Clingon for his success.
But...these are what Graham Bummers recommends in his absolutely free reports!
Thank Goddess!
Maybe the first step improving the odds in the casino.
I read an article that one of these 3x inverse by the Bank of Liborgate fame Barclays actually made no sense fundamentally on what it was supposed to be simulating.
For the very first time, I slightly disagree with a clause in a Tyler headline ("Fascination . . . ends").
The concept of porno XXX leverage hasn't died -- day traders (and algo robots) are simply focusing on the most liquid vehicles: TNA/TZA and FAS/FAZ, etc., while enough overnight holders and novices have already been burned by the originals and see "3X" as almost a brand name to be avoided.
An apt analogy would be: do we really need a new, innovative brand of toilet tissue, when we're successfully wiping our asses with the current top brands ? /semi-SARC
The losses on the short side are in fact INFINITE.
Only for long-term interday, not short-term intraday, holders. An omelette left on a stove for several fortnights could burn down a house, couldn't it? (I once knew a man who had "infinite" losses on TZA -- he made the mistake of using shorter and shorter time periods for his candles, until he eventually divided by zero.)
My broker sends a message each and every time a 3X fund is held overnight -- I'm not sure what else they could do. IMO, unless an individual account is flagged as a 'pattern day trader', I would be OK with banning the purchase of 3X funds -- should be a simple matter to enforce with a CUSIP table.
I have no way of proving this, but I'd bet there's a 30/70 split between those getting killed with FAZ because they don't understand the math vs. those trying to play "hero ball" with 3-week holds so they can earn enough take a "French" vacation for the 3Q each year.
Average volume on COWL=> 4,500 shares
If a former Governor and Senator steals client money and doesn't get prosecuted "what happens next?" comes to mind. "A bailout too far"? Anywho...DO NOT SHORT THIS MARKET.
Beginning of the end of the triple fraud.
With a symbol like $SICK you get what you pay for. Meanwhile this nails the coffin shut on the contrary bull run from March 2009. Of course every other indicator of market tops and deflation have been sounded and maximum thrust is long behind so watch out below.