Behind the Ticker: Direxion’s Sparks Talks Leveraged ETFs
In this week’s episode of Behind the Ticker, Brad Roth chats with Direxion’s Mo Sparks about the firm’s latest 2X leveraged bull ETFs to launch as well as the general thesis behind the firm’s approach to offering shorter-term investing strategies.
Behind the Ticker’s host Brad Roth, CIO of Thor Financial Technologies, sits down with Mo Sparks, Chief Product Officer at Direxion, to talk the firm’s shorter to intermediate-term investing strategies, the newest 2x Bull ETFs launched, and where the firm seems opportunities for growth ahead.
You can also listen to this episode on Spotify, Apple Podcasts, or any of your preferred streaming platforms.
Strategies for Short-Term Investing
Mo Sparks’ started his career at Vanguard — a detail he says he would never change, because the foundational principles he absorbed there about building products with the end investor in mind and leading with education have stayed with him through every subsequent role. From Vanguard's Pennsylvania campus he moved to the New York Stock Exchange in late 2019, arriving just as the ETF Rule (Rule 6c-11) had passed. Then after a stint at Raymond James building out their ETF platform, he landed at Direxion roughly a year ago as Chief Product Officer.
Direxion traces its roots to 1997, launched its first ETFs in 2008 with 3X leverage products, and has grown to approximately $55 billion in assets under management across more than 130 ETFs as of this episode — including four single stock strategies launched the same day the episode was recorded based on Adobe, PayPal, Texas Instruments, and United Health. They are the Direxion Daily ADBE Bull 2X ETF (ADBU), the Direxion Daily PYPL Bull 2X ETF (PYPU), the Direxion Daily TXN Bull 2X ETF (TXNU), and the Direxion Daily UNH Bull 2X ETF (UNHU).
The firm is built around traders who have a view they want to express — often over a very short time horizon — and want tools that allow them to act on that view with magnitude. The firm's products are designed to deliver a multiple of the stated daily return of an index, sector, or individual stock. The daily reset mechanism is central to how these products function and central to the education that Sparks insists has to accompany their use.
The lineup spans from broad market strategies like the Direxion Daily S&P 500 Bull 3X ETF (SPXL) down to individual single-stock leveraged products. In between sits what Sparks describes as the Titan series — a concentrated basket concept introduced last year that targets the top five names by market cap within a given sector, rebalanced quarterly and equally weighted, at 2X exposure.
The bull/bear question around individual names is one of the more interesting product decisions the firm makes. Historically, Direxion paired bull and bear products. The data over time showed an overwhelming preference for bull strategies in terms of asset accumulation, which is consistent with the general optimism that characterizes retail investor behavior. For the four new launches, all four were bull-only products, a deliberate call based on the team's read of sentiment for each name.
Sparks also discusses how advisors use the firm’s funds in their portfolios: those who use them well are advisors who understand the mechanics, have a defined thesis, and have defined the exit before they enter. On the inverse side, the primary case is hedging — using a -1X product against a concentrated position to reduce net exposure in advance of a binary event like earnings. On the bull side, the use case is tactical expression of a short-to-intermediate-term view. If a client has been reading about AI and believes Texas Instruments is positioned to benefit from continued semiconductor demand, a single stock bull strategy provides a way to express that conviction with leverage for the duration of that view.
The conversation covers where the firm is looking to expand next as single stock leveraged ETF strategies near capacity, discussions of tokenization, and more. Advisors and investors wanting to learn more about the firm can head over to Direxion’s site, and those looking for additional education on leveraged and inverse strategies shouldn’t miss the Direxion Leveraged & Inverse ETF University.
Disclaimer: The market insights, projections, and investment strategies expressed in this article are solely those of the contributor and do not necessarily reflect the views or opinions of ETF.com. This content is provided for informational purposes only and does not constitute financial, investment, or legal advice.
