LABD
3x Short
Direxion Daily S&P Biotech Bear 3X Shares
Shorts: Biotech (XBI)
Expense Ratio
1.04%
Leverage
3x Inverse
Issuer
Direxion
Inception
May 2015
High Risk Leveraged Product
LABD 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 LABD Shorts
LABD shorts the S&P Biotech Select Industry Index (XBI), which tracks a modified equal-weight portfolio of U.S. biotechnology stocks.
It uses swaps and other derivatives to deliver -3x the daily return of its underlying index, aiming to profit when biotech stocks fall.
Key Risks
- High leverage (3x) amplifies losses if the biotech sector rises.
- Daily reset structure causes decay in volatile or trending markets.
- High expense ratio (1.04%) and compounding risk erode long-term returns.
- Sector-specific risk concentrated in volatile biotech stocks.
- Designed for short-term trading only, not buy-and-hold investing.
Best Use Cases
- Short-term hedge for an existing long portfolio of biotech stocks.
- Speculative bet on a near-term decline in the biotech sector.
- Part of a sophisticated pairs trade or tactical allocation strategy.
- Gaining inverse exposure without a margin account or shorting individual stocks.
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Frequently Asked Questions
What does LABD short?
LABD provides -3x the daily return of the S&P Biotech Select Industry Index (XBI), which contains U.S. biotechnology companies.
Is LABD a good long-term investment?
No. Due to daily leverage reset and compounding, LABD is designed only for short-term trading, typically a single day.
What is the main risk of holding LABD?
The primary risk is that a rally in biotech stocks will cause amplified (3x) losses. Volatility decay also erodes value over time.