Direxion Plans Energy-Focused Single-Stock ETFs

At a time when flows into energy exchange-traded funds are stumbling despite continued strong performance, Direxion has filed for four single-stock ETFs offering inverse and leveraged exposures associated with key energy stocks. The pending funds are tied to the securities of Chevron Corp., ConocoPhillips, ExxonMobil Corp. and EOG Resources Inc. 

The ETFs are as follows: 

• Direxion Daily CVX Bull 1.5X Shares 
• Direxion Daily CVX Bear 1X Shares  
• Direxion Daily COP Bull 1.5X Shares 
• Direxion Daily COP Bear 1X Shares  
• Direxion Daily XOM Bull 1.5X Shares  
• Direxion Daily XOM Bear 1X Shares 
• Direxion Daily EOG Bull 1.5X Shares  
• Direxion Daily EOG Bear 1X Shares 

The filings do not include tickers or expense ratios.  

Energy stocks did not feature prominently in the first wave of single-stock ETF filings that occurred earlier this year, which is somewhat surprising given how the sector has been on a tear.  

AXS Investments filed for two times leveraged and inverse funds tied to the performance of ConocoPhillips, while Kurv Investment Management Inc. included funds offering two times leveraged and inverse exposure to ExxonMobil stock. Neither pair of proposed funds has launched yet.  

A Hot Sector Cooling Off? 

Interestingly, the stocks mentioned in the Direxion filing are all among the top five holdings of the $37.8 billion Energy Select Sector SPDR ETF (XLE), the largest energy ETF.  

That fund has been on a tear, notching returns of nearly 48% this year through the end of August and 74% for the 12-month period.  

However, during the past three months, XLE has seen outflows of $1.8 billion, so investors may be pulling back a bit on the latest best-performing sector. Either way, the proposed funds, which could launch as soon as November, will offer them a way to play either side of key stocks within the energy space.  

There are currently 16 leveraged and inverse single-stock ETFs trading on U.S. markets, with more than 60 remaining funds in that category waiting in the wings to make their debuts. The single-security ETF trend also features single-bond ETFs, and proposed single-stock ETFs target American depositary receipts or single-stock ETFs incorporating options strategies.  

Contact Heather Bell at [email protected]