Exchange Traded Funds (ETFs)

Profit From Volatility With This Fund

The Direxion Daily S&P 500 High Beta Bear 3X Shares (NYSEARCA: HIBS) provides 3x daily inverse exposure to a beta-weighted index of the 100 highest-beta stocks in the S&P 500.

HIBS is passively managed to select the top 100 stocks from the S&P 500 Index with the highest sensitivity to market movements (beta) over the past 12 months, while weighting each of them based on its calculated beta. The fund is designed to deliver 3x inverse exposure to those 100 highest-beta stocks, aiming to provide -300% of the index’s return for a one-day period.

To achieve its goal, the fund holds swaps, futures, short positions or other financial instruments that, in combination, produce inverse exposure to the index.

HIBS gets the added exposure by using short-term financial instruments that are high quality. The index is reviewed and rebalanced quarterly. As a levered product, HIBS is not a buy-and-hold exchange-traded fund (ETF). Rather, it should be used as a short-term, tactical position.

Chart courtesy of www.stockcharts.com

Direxion Daily S&P 500 High Beta Bear 3X Shares has $44 million in assets under management with a 0.19% daily spread. Its expense ratio is 1.08%, meaning it is relatively expensive to hold in relation to other exchange-traded funds.

As with any instrument, potential investors should conduct their own due diligence in deciding whether or not this fund fits their own individual investing needs and portfolio goals.

As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.

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Jim Woods

Jim Woods is a 20-plus-year veteran of the markets with varied experience as a broker, hedge fund trader, financial writer, author and newsletter editor. Jim is the editor of Successful Investing, the Bullseye Stock Trader, and The Deep Woods (formerly the Weekly ETF Report). His books include co-authoring, “Billion Dollar Green: Profit from the Eco Revolution,” and “The Wealth Shield: How to Invest and Protect Your Money from Another Stock Market Crash, Financial Crisis or Global Economic Collapse.” He’s also ghostwritten many books and articles, as well as edited content for some of the investment industry’s biggest luminaries. His articles have appeared on many leading financial websites, including StockInvestor.com, InvestorPlace.com, Main Street Investor, MarketWatch, Street Authority, Human Events and many others. Jim formerly worked with Investor’s Business Daily founder William J. O’Neil, helping to author training courses in the CANSLIM stock-picking methodology. The independent firm TipRanks rates Jim the No. 3 financial blogger in the world (out of more than 6,000). TipRanks calculates that, since 2012, he's made 361 successful recommendations out of 499 total, earning a success rate of 72% and a +15.3% average return per recommendation. He is known in professional and personal circles as “The Renaissance Man,” because his expertise includes such varied fields as composing and performing music; Western horsemanship, combat marksmanship, martial arts, auto racing and bodybuilding. Jim holds a BA in philosophy from the University of California, Los Angeles, and is a former U.S. Army paratrooper. A self-described “radical for capitalism,” he celebrates the virtue of making money from his Southern California horse ranch.