Chinese stocks have been red hot this year, and a new entrant in the ETF space is looking to intensify those returns through the use of leveraging.
Direxion Investments recently introduced the Direxion Daily CSI 300 China A Share Bull 2x Shares CHAU. This ETF seeks to replicate 200 percent of the daily performance of the CSI 300 Index, representing the 300 largest and most liquid stocks in the China A-share market.
A Closer Look
Sector Peer
ASHR has gained nearly 122 percent over the last 52-weeks and just recently hit new all-time highs. Many investors have speculated whether or not Chinese stocks are currently in bubble territory.While CHAU will use leverage to produce daily returns that are approximately double that of ASHR, investors should be wary of expecting those same gains to compound over time. The frequent rebalancing and magnification of daily price changes make holding leveraged ETFs over long periods a risky proposition.
Unique Offerings
This represents the 50 largest stocks on the Hong Kong Stock Exchange. XPP is the magnified version of the iShares FTSE/Xinhua China 25 Index (ETF) FXI.
Both CHAU and XPP charge a net expense ratio of 0.95 percent and should only be considered for aggressive investors with short-term time horizons that understand the risks of leverage.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.