Traders Start To Acknowledge A New Leveraged ETF

Donald Trump is certainly one of the most controversial and polarizing figures to occupy the White House in the modern era of U.S. politics. 

And while it can be said some “Trump trades” have lost momentum since the election, others are as hot as ever. Either that, or it is a mere coincidence that ETFs tracking aerospace and defense stocks have regularly been making all-time highs in recent days.

That is good news for the first leveraged ETF dedicated to the aerospace and defense sub-sector, the Direxion Daily Aerospace & Defense 3X Shares DFEN. DFEN debuted in May as part of a suite of several new leverage ETFs from Direxion, some of which were aimed at Trump trade ideas. 

DFEN On The Move

DFEN attempts to deliver triple the daily returns of the Dow Jones U.S. Select Aerospace & Defense Index, a widely followed gauge of U.S. aerospace and defense stocks.

“The Index attempts to measure the performance of the aerospace and defense industry of the U.S. equity market, according to Direxion. 

Since DFEN's index is a cap-weighted benchmark, it is good news for this leveraged ETF when big-name defense stocks such as Dow components Boeing Co. BA and United Technologies Inc. UTX rally. Good news for DFEN: Boeing and United Technologies are two of the 16 Dow stocks with year-to-date gains of at least 16 percent.

Gaining Traction

Sometimes it takes new ETFs awhile to gain a following, a point that applies to rookie leveraged ETFs as well. To its credit, DFEN is starting to gain momentum among active traders. For the 30-day period ended Aug. 2^nd, DFEN averaged daily inflows of nearly $101,000, according to Direxion data. 

Whether President Trump deserves the credit or not, four of the 21 ETFs that hit record highs on Thursday and that quartet included DFEN.

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