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DRIP Fund Description
The Direxion Daily S&P Oil & Gas Exploration & Production Bear 3X Shares ETF provides 3x inverse daily exposure to an equal-weighted index of the largest oil and gas exploration and production companies in the US.
DRIP FactSet Analytics Insight
DRIP seeks to deliver -300% of the daily
“only suited for very-risk-tolerant investors.” performance of the S&P Oil & Gas Exploration & Production Select Industry Index—the same index underlying XOP. The fund uses over-the-counter derivatives to achieve this objective.
Because of its equal-weighting, the underlying index exhibits a small company tilt and elevated market risk. The inverse triple leverage of the fund pushes this market beta close to negative 4. As a result, DRIP is extremely volatile and only suited for very-risk-tolerant investors.
As with all levered and inverse funds, DRIP should not be expected to deliver 3 times the inverse performance of its index for periods longer than 1 day—compounding and path-dependency can cause significant deviations over longer time frames.
DRIP is clearly meant as a tool for placing tactical bets and not as a permanent holding in a portfolio. As such, the costs of getting in and out of the fund—spreads and any premium/discount—are more important than the fund’s high expense ratio. In this respect, it remains to be seen if the ETF achieves enough liquidity to become a viable option for placing short-term bets on the direction of the energy exploration and production sector.
DRIP FactSet Analytics Block Liquidity
This measurement shows how easy it is to trade a $1 million USD block of DRIP. DRIP is rated a N/A out of 5.