Pass on this ETF

Article Excerpt

Direxion Daily Semiconductor Bull 3x ETF $35.05 (New York symbol SOXL) aims to use a combination of derivatives and debt to offer daily returns that correspond to three times the daily gains of the ICE Semiconductor Index. If SOXL is successful in meeting its investment objective, its price should gain (or lose) approximately three times that of the semiconductor index. Institutional investors, particularly hedge funds, carry out around 60% of all trading in leveraged and inverse-leveraged investments. They generally use them as part of complicated multi-investment trading plays. They also trade frequently, and in large quantities. Inevitably, investments like these will go down more readily than they will go up. That’s because investors have to absorb the costs of borrowing, entering into agreements with counterparties, etc., on top of the 0.72% MER. You can only profit in investments like these if you get in and out at precisely the right moment. But if you had the superhuman sense of market timing that you’d need, you could…