A New Bearish Biotech ETF And A Lazarus Act For A Couple Leveraged Funds
Every year, dozens of exchange-traded funds close, never to be heard from again. The good news for the ETF industry and its supporters is that new product launches frequently outpace closures usually by wide margins.
Rare is the ETF that rises from the dead, but that is exactly what is happening Thursday for two inverse, triple-leveraged ETFs. Direxion, the second-largest issuer of inverse and leveraged ETFs, is resuscitating the Direxion Daily Healthcare Bear 3X Shares (NYSE:SICK) and the Direxion Daily Natural Gas Related Bear 3X Shares (NYSE:GASX).
Related Link: Another Visit With A Leveraged Biotech ETF
SICK, CURE And GASX
Direxion shuttered SICK early in the third quarter of 2012. The ETF will attempt to deliver triple the daily inverse performance of the S&P Health Care Select Sector Index, the same benchmark tracked by the Health Care SPDR (ETF) (NYSE:XLV). XLV is the largest health care ETF by assets.
SICK's bullish counterpart, the Direxion Daily Healthcare Bull 3x Shares (Direxion Shares Exchange Traded Fund Trust (NYSE:CURE)), has cemented its status as one of the largest leveraged sector ETFs, with year-to-date inflows of $71.1 million. That comes after traders poured nearly $122 million into CURE last year.
In the case of GASX, which was shuttered in late September 2014, smart traders probably wish the ETF had never been closed. GASX will seek to deliver triple the daily inverse performance of the ISE-Revere Natural Gas Index. That is the same index tracked by the First Trust ISE Revere Natural Gas (ETF) (NYSE:FCG), an ETF that has plunged nearly 54 percent over the past year.
Given FCG's history of lagging when natural gas rises and falling at an alarming clip when the commodity retreats, GASX could prove to be a well-timed relaunch.
Other News From Direxion
Direxion also introduced the Direxion Daily S&P Biotech Bear 1X Shares (NYSE: LABS), the inverse-though-not-leveraged answer to the Direxion Daily S&P Biotech Bear 3X Shares (NYSE:LABD). Both ETFs are bearish plays on the S&P Biotechnology Select Industry Index, which is an equal-weight index.
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