3X RUSSELL 2000 (LONG & SHORT)
TNA and TZA are exchange-traded funds (ETFs) managed by Direxion that offer investors the opportunity to invest in the Russell 2000 index with leverage.
The Direxion Daily Small Cap Bull 3X Shares ETF (TNA) aims to provide daily investment results, before fees and expenses, that correspond to 300% of the daily performance of the Russell 2000 index. This means that if the Russell 2000 index increases by 1%, TNA is designed to increase by 3%. TNA is a “long” ETF, which means it is designed to provide investors with amplified returns when the index it tracks increases.
On the other hand, the Direxion Daily Small Cap Bear 3X Shares ETF (TZA) aims to provide daily investment results, before fees and expenses, that correspond to 300% of the inverse (or opposite) of the daily performance of the Russell 2000 index. This means that if the Russell 2000 index declines by 1%, TZA is designed to increase by 3%. TZA is a “short” ETF, which means it is designed to provide investors with amplified returns when the index it tracks decreases.
Both TNA and TZA are designed to provide leveraged exposure to the Russell 2000 index, which means that they use financial derivatives and borrowing to increase the potential returns of the underlying index. However, leveraged ETFs like TNA and TZA also carry higher risk and are typically used by sophisticated investors who are comfortable with the potential for higher volatility and potential losses.
Investors who are bullish on the small-cap U.S. stock market may consider investing in TNA. This ETF can be used to amplify the potential returns of a small-cap stock market portfolio or as a way to bet on the future performance of the Russell 2000 index. Similarly, investors who are bearish on the small-cap U.S. stock market may consider investing in TZA as a way to hedge against potential losses in a small-cap stock portfolio or as a way to bet on the future decline of the Russell 2000 index.
It’s important to note that leveraged ETFs like TNA and TZA are designed for short-term trading and are not suitable for long-term investing. Due to the compounding effect of leverage, these ETFs can experience significant losses over time if held for an extended period. In addition, there is no guarantee that these ETFs will meet their stated investment objectives.
In summary, TNA and TZA are leveraged ETFs that offer investors the opportunity to invest in the Russell 2000 index with amplified returns. TNA is a “long” ETF that aims to provide investors with amplified returns when the index increases, while TZA is a “short” ETF that aims to provide investors with amplified returns when the index decreases. However, these ETFs carry higher risk and are designed for short-term trading, so it’s important to do your research and understand the risks before investing.