Earn 8% and (Potentially) 3x the S&P's Return This Year, but There Is a Catch

"FAS uses swaps and derivatives to deliver three times the daily return of the Financial Select Sector Index. When JPMorgan Chase & Co. ( NYSE:JPM), Bank of America Corporation ( NYSE:BAC), and Visa Inc. ( NYSE:V) (the fund's largest holdings) climb 2% in a day, FAS targets a 6% gain. The fund holds $2.5 billion in assets, with 59% in financial stocks and roughly 33% in cash instruments and swaps that create the leverage."

"This structure works through daily rebalancing. Each morning, the fund resets exposure to hit that 3x target for that trading day only. Over longer periods, the math gets complicated. Path dependency means returns diverge from a simple 3x multiplier. FAS has demonstrated performance that varies from the theoretical 3x multiplier due to volatility decay and daily rebalancing effects."

"That 8% yield came from a $12.09 special distribution in December 2025, representing 87% of the year's total payouts. Regular quarterly distributions typically range from $0.30 to $0.50, translating to an annual yield around 1.5%. The special distribution was a one-time event, likely from realized gains as the fund rebalanced positions. The expense ratio of 0.89% is more than 11 times higher than Financial Select Sector SPDR Fund ( NYSEARCA:XLF)'s 0.08%,"

Direxion Daily Financial Bull 3X Shares (FAS) seeks three times the daily return of the Financial Select Sector Index by using swaps and derivatives and holding roughly 59% in financial stocks and 33% in cash instruments and swaps. The fund resets exposure each morning to target 3x for that trading day, producing path-dependent long-term returns that can diverge due to volatility decay and daily rebalancing. A large $12.09 special distribution drove an 8% yield in 2025, but regular quarterly payouts imply about a 1.5% yield. The expense ratio of 0.89% magnifies costs versus non‑leveraged peers.

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