ETF Spotlight: YINN, China's Triple-Leveraged Bet
The Direxion Daily FTSE China Bull 3X Shares surged over the past year despite recent outflows amid new trade tensions.
The latest round of trade tensions between the U.S. and China has brought renewed attention to leveraged exchange-traded funds tracking Chinese markets, highlighting the risks and opportunities of amplified exposure.
Earlier this month, U.S. President Donald Trump announced a 10% tariff on Chinese imports, citing national security concerns. Chinese President Xi Jinping quickly retaliated with 10% and 15% tariffs on $14 billion of U.S. goods, including energy and agricultural products.
To take advantage of these whipsaw trade effects, the Direxion Daily FTSE China Bull 3X Shares (YINN) offers investors triple the daily exposure to Chinese large-cap stocks as these new tariffs and retaliatory measures reshape the investment landscape.
Understanding YINN's Triple Leverage
Managed by Rafferty Asset Management since its 2009 inception, YINN provides exposure to the FTSE China 50 Index through a combination of equity swaps and futures contracts, according to etf.com data.
The fund features leveraged exposure primarily through the iShares China Large-Cap ETF (FXI), which holds stakes in Chinese tech giants like Alibaba Group (BABA) at 10.5% and Tencent Holdings (TCEHY) at 8.7%, according to etf.com data.
The ETF's structure means a 1% move in the underlying index results in a roughly 3% move in YINN's price, according to etf.com. With over $1.9 billion in assets, YINN carries a 1.47% expense ratio and rebalances its leveraged exposure daily.
The daily rebalancing can lead to returns that deviate from three times the index over longer periods due to compounding effects.
The fund's performance reflects the volatility of current markets, posting a 130.7% gain over the past year while experiencing recent outflows of $45 million over the past five days, etf.com data show. The fund could be a good vehicle for investors looking to make big, short-term bets on the Chinese market.
For every YINN, there's a YANG
While YINN attracts investors optimistic about China's resilience, the Direxion Daily FTSE China Bear 3X Shares (YANG) moves in the opposite direction, offering investors a way to bet against Chinese markets with triple leverage. YANG serves those who expect Chinese market declines amid the growing economic tensions.
The fund's concentrated exposure comes as Chinese markets face multiple headwinds. Beyond the new trade tensions, China's economy continues to grapple with property sector challenges and deflation concerns.
