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 (NYSEARCA: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. (NYSE: BA) and
United Technologies Inc. (NYSE: 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. 2nd, 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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