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This New ETF Brings Leverage To The Eurozone

July 13, 2017 2:43 pm
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Exchange traded funds (ETFs) dedicated to European equities are outperforming their U.S. counterparts this year while hauling in billions of new assets. Seems like a perfect storm for a new leveraged Europe ETF.


One such fund arrived Wednesday with the debut of the Direxion Daily EURO STOXX 50 Bull 3X Shares (NYSE:EUXL). The Direxion Daily EURO STOXX Bull 3X Shares will attempt to deliver triple the daily returns of the EURO STOXX 50 Index, one of the most widely followed gauges of Eurozone blue-chip stocks.


“The outlook for European equities has turned bullish, with growing interest from traders,” said Sylvia Jablonski, managing director at Direxion, in a release. “As political risks dissipate following the results of the French elections, the Eurozone economy strengthens and prospects for earnings improve, this may offer active traders exposure to a highly reputable index tracking 50 of the largest and most liquid blue-chip European stocks.”  

That benchmark represents the performance of the 50 largest companies among the 19 supersectors in terms of free-float market capitalization in 11 Eurozone countries. Historically this includes Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain. The Index captures approximately 60 percent of the free-float market capitalization of the EURO STOXX TMI Supersector Index, according to Direxion


What's Inside


The EURO STOXX 50 Index is a dedicated Eurozone benchmark, so traders will not find exposure to the U.K., Switzerland or Nordic nations inside the new EUXL. Allocations to the countries and regions are hallmarks of diversified Europe ETFs that are not focused on the Eurozone.


What active traders will find in EUXL is a massive combined allocation to Germany and France, the Eurozone's two largest economies. In order, France and Germany combine for 69 percent of the EURO STOXX 50's weight. Spain, the Eurozone's fourth-largest economy, and the Netherlands combine for about 20.5 percent.


Five sectors – financial services, industrials, consumer discretionary, consumer staples and healthcare – have double-digit weights in the index. 


Not The First Time


EUXL is not Direxion's first foray into the world of leveraged Europe ETFs. The firm also sponsors the Direxion Daily FTSE Europe Bull 3X Shares (NYSEARCA:EURL), which has been around for three and a half years.


EURL seeks to deliver triple the daily returns of the FTSE Developed Europe All Cap Index, an index that includes exposure to the U.K., Switzerland and Nordic countries as well as Eurozone members.


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