Robots are coming for investors in new 3-times leveraged ETF
Direxion, a $13.6 billion money manager, is starting an ETF. Here's what you need to know.
(Bloomberg) –Just when you think an investing idea has reached its saturation point, a new exchange-traded fund comes along that tries to take it to new heights — literally.
In this case it’s robots.
Direxion, a $13.6 billion money manager, is starting an ETF that seeks to use leverage to deliver three times the daily performance of a robotics and artificial intelligence index, the company said in a release on Thursday.
The fund basically is a juiced up alternative to the $2.4 billion Robo Global Robotics & Automation Index ETF, ticker ROBO, or Global X’s $2.6 billion Robotics & Artificial Intelligence ETF, ticker BOTZ, both of which offer exposure to companies set to benefit from the growth in robotics.
The difference is leveraged products are designed for traders rather than buy-and-hold investors. Indeed, vehicles that use swaps or futures have come under greater scrutiny since XIV, a derivative-based exchange-traded note issued by Credit Suisse Group AG, imploded in February, hurting a number of mom-and-pop buyers.
This latest product is “ not suitable for all investors and should be utilized only by investors who understand the risks associated with seeking daily leveraged and inverse investment results, and intend to actively monitor and manage their investments,” Direxion said. The company already runs leveraged funds focused on the retail and pharmaceutical sectors.
The Direxion Daily Robotics, Artificial Intelligence & Automation Index Bull 3X Shares, which trades under the ticker UBOT, will charge about $12.20 for every $1,000 invested. That includes other operating costs and acquired expenses of the fund estimated for this fiscal year, according to regulatory documents. Its base management fee is 75 basis points.
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