Direxion to Ground Airline ETF

Direxion, the second-largest issuer of leveraged and inverse ETFs, has found the going a little tougher with more traditional ETFs and has decided to shut the Direxion Airline Shares ETF FLYX following a recommendation from Rafferty Asset Management. Shares of the fund will cease trading on the New York Stock Exchange and close to purchases by investors as of the close of regular trading on October 10, 2011, the firm said in a statement. The liquidation process for FLYX will begin on Oct. 10 and last through Oct. 17. FLYX, which made its debut in December 2010, has struggled to attract assets and has average daily volume for the last three months of just 154 shares per day. The ETF was Direxion's first foray into non-leveraged/inverse products. Airline ETFs in general have not proven popular with investors. The Guggenheim Airline ETF FAA, which is nearly three years-old, has just $18.6 million in AUM and average daily volume of less than 12,000 shares. ''Direxion's core business and success has been focused in the leveraged and inverse ETF, and other alternative fund space. With declining interest in a non-leveraged airline industry ETF, we feel it is in the best interest of the shareholders to close the fund and stick to the product for which we are best known," said Dan O'Neill, President and CIO of Direxion. Those comments could be considered interesting by some as Direxion announced plans for a broad suite of non-leveraged India-specific ETFs earlier this year.