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3X Exchange-Traded Funds

Thursday, November 06, 2008 | 08:30 AM

When we made our buy 'em call on October 10th, we wanted to avoid single stock risk. And, we wanted to have prudent exposure, while still maintaining some cash levels. Our solution was to deploy enough cash into 2 to 1 leveraged funds on the S&P (SSO) and the Nasdaq 100 (QLD) so that our managed accounts were 50% cash, and 100% effective market exposure. That worked out well.

Now, along comes an even more aggressive ETF: Triple upside and downside exposure. I have no opinion of these, as I have not really worked out the usages of this. It does seem a but excessive, and my friend Paul absolutely hates them.

Here is the full run of triple leverage ETFs. I wonder if Rydex will come out with a competitive product or not.

Fund Name . . . Symbol . . .       Benchmark . . .       Leverage

Direxion Bull Funds

• Large Cap Bull 3x
(BGU) Russell 1000 Index    300%

• Small Cap Bull 3x
(TNA) Russell 2000 Index    300%

• Russell 1000® Energy
(ERX) Energy Bull 3x Shares Index 300%

• Financial Bull 3x Russell 1000 Financial Services Index
(FAS)    300%

Direxion Bear Funds

• Large Cap Bear 3x
(BGZ) Russell 1000 Index       -300%

• Small Cap Bear 3x
(TZA) Russell 2000 Index       -300%

• Russell 1000 Energy
(ERY) Energy Bear 3x Shares    Index                   -300%

• Financial Bear 3x Russell 1000 Financial Services Index
(FAZ) -300%