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Wall Street delivered a downbeat performance last week.
Since the end of October 2023, the S&P 500 Biotechnology Select Industry Index jumped over 30%. It could maintain its upward trajectory given the early IPO activity in 2024 thus far.
Shorting and inverse bets don't work over time on average, making inverse funds like Direxion Daily S&P Biotech Bear 3X Shares ETF a big avoid. The LABD ETF is a triple-leveraged inverse ETF that focuses on the biotechnology sector and aims to profit from a decline in the value of the index it tracks. LABD is not suitable for long-term investment, incurs high costs, and experiences high volatility, making it a high-risk, high-reward investment.
Pairing Direxion Daily's S&P Biotech Bull 3X Shares ETF with their S&P Biotech Bear 3X Shares ETF produces a low volatility couple. Shorting both assets is attractive because leveraged assets erode over time due to their higher beta and inability to stay correlated over longer timeframes. The performance of the couple is dependent on the behavior of the underlying, with the short couple expected to lose value during strong trends.
Direxion Daily S&P Biotech Bear 3X Shares ETF failed to generate decent yield & price growth over the past 90 months. I don't foresee this fund generating positive growth in the near future, either. LABD has a high expense ratio, and its investments in derivatives enhance the chances of default. Its drift is also at its worst since the fund's inception. LABD is a short-term trading tool for seasoned traders who have a strategy with clear entry and exit signals, and have a strong understanding of leverage.
FAQ
- What is LABD ETF?
- Does LABD pay dividends?
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- What is LABD inception date?