EDZ
3x Short
Direxion Daily Emerging Markets Bear 3X
Shorts: Emerging Markets (EEM)
Expense Ratio
1.08%
Leverage
3x Inverse
Issuer
Direxion
Inception
Nov 2008
High Risk Leveraged Product
EDZ is a 3x leveraged inverse ETF designed for short-term trading only. Daily rebalancing causes significant decay over time. NOT suitable for buy-and-hold investors.
What EDZ Shorts
EDZ shorts the MSCI Emerging Markets Index, a benchmark for large and mid-cap equities across 24 emerging market countries. It provides -300% of the index's daily return.
It uses swaps, futures, and other derivatives to achieve its daily 3x inverse leveraged goal, resetting its exposure daily.
Key Risks
- Leverage Risk: 3x daily leverage amplifies losses and increases volatility.
- Compounding Risk: Daily reset can cause returns to diverge significantly from 3x the index's return over longer periods.
- Emerging Markets Risk: Exposure to volatile economies with political, currency, and liquidity risks.
- Derivatives Risk: Relies on complex instruments like swaps which carry counterparty risk.
- High Expense Ratio (1.08%): Costs erode returns, especially in a holding period.
Best Use Cases
- Short-term hedging against a decline in emerging market equities.
- Tactical, short-duration bearish speculation on emerging markets by experienced traders.
- Portfolio diversification for sophisticated investors seeking inverse exposure.
- Paired with a long position for nuanced market-neutral or hedging strategies.
Similar Instruments
Frequently Asked Questions
Is EDZ a good long-term investment?
No. EDZ is designed for daily trading and holding periods longer than one day can result in significant performance deviation due to compounding, making it unsuitable for long-term buy-and-hold investing.
What index does EDZ track?
EDZ seeks daily investment results, before fees and expenses, of -300% of the daily performance of the MSCI Emerging Markets Index.
How is EDZ different from shorting EEM?
EDZ provides 3x inverse daily exposure without the need for a margin account or the unlimited risk potential of directly shorting a stock or ETF like EEM. However, it carries its own unique risks like compounding.