Full-Bull Latin America
What do you get when you combine a declining stock market with a leveraged bull fund? Really crappy performance. The Direxion Monthly Latin America Bull 2x Fund (DXZLX) seeks monthly investment results that are 200% of the calendar month performance of the S&P Latin America Index.
The index itself is 40 of the most highly liquid companies in South America. The problem — Brazil represents 53% of the portfolio. Year-to-date through Sept. 11, Brazil’s stock market is down 14.4% — the worst performance of any major country. Now amplify that by 200% and you’ve got a hot mess. Investors are paying 1.9% annually for the privilege of losing money.
Since its inception in May 2006, the fund has achieved a negative annualized total return of 12%. Year-to-date it’s down 25%. Sure, you can make the argument that its luck’s about to change … but why take the risk? I don’t believe in leveraged funds to begin with, so going into Brazil where things are upside down right now is simply asking for trouble.