The Monthly Objective: Direxion Monthly Leveraged Mutual Funds
The Direxion 2x Monthly Leveraged Mutual Funds provide 200% (or 200% of the inverse) exposure to their benchmarks and the ability for investors to navigate changing markets with flexibility. Although leveraged mutual funds are somewhat similar to non-leveraged mutual funds, there are key differences that are important for investors to understand. The following information is designed to provide you with details concerning the composition of these funds, their monthly rebalancing feature, and the potential risks associated with them.
A Moving Target: How the Fund’s Exposure to the Benchmark Can Vary
If a Direxion 2x Monthly Leveraged Mutual Fund is purchased on the last day of the trading month, any investment made may receive the fund’s target 200% (or 200% of the inverse) exposure from the time of purchase until the position is sold — or until the next portfolio rebalance at the end of the following month (whichever event happens first).
If a purchase is made on any day other than the last trading day of the month — that is, intra-month — the total exposure of the fund may be higher or lower than the stated monthly objective, depending on how much the target index has moved away from its value at the time of the previous monthly rebalance. (This movement is the result of daily changes in the market.)
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