TZA
3x Short
Direxion Daily Small Cap Bear 3X Shares
Shorts: Russell 2000 (IWM)
Expense Ratio
1.08%
Leverage
3x Inverse
Issuer
Direxion
Inception
Nov 2008
High Risk Leveraged Product
TZA 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 TZA Shorts
TZA seeks daily investment results, before fees and expenses, that correspond to 300% of the inverse (opposite) of the daily performance of the Russell 2000 Index.
It uses financial derivatives like swaps and futures to achieve its goal, making it a tool for short-term bearish bets or hedging against declines in small-cap U.S. stocks.
Key Risks
- Leverage Risk: The 3x daily target magnifies losses and increases volatility.
- Compounding Risk: Daily reset can cause significant divergence from 3x the index's return over longer periods.
- Small-Cap Market Risk: The underlying Russell 2000 can be more volatile than large-cap indices.
- High Expense Ratio: The 1.08% fee erodes returns over time.
- Short-Term Holding Period: Designed for daily use, not long-term investment.
Best Use Cases
- Short-term hedging against a decline in small-cap U.S. stocks.
- Speculative, tactical bearish bets on the small-cap sector for a single day or few days.
- Portfolio diversification for sophisticated investors seeking inverse exposure.
- Paired with a long small-cap position to temporarily reduce net exposure.
Similar Instruments
Frequently Asked Questions
Is TZA a good long-term investment?
No. TZA is designed for daily returns. Due to compounding, its performance over weeks or months can deviate significantly from 3x the inverse of the Russell 2000's return, making it unsuitable for buy-and-hold.
What does TZA short?
TZA provides -3x the daily return of the Russell 2000 Index, which tracks approximately 2,000 small-capitalization U.S. companies.
How is TZA different from shorting IWM?
Shorting IWM (an ETF tracking the Russell 2000) provides -1x exposure. TZA uses leverage and derivatives to target -3x daily exposure, which is riskier and more complex than traditional short selling.