Direxion files 2x daily ETFs on SK hynix, rare earths and $1 trillion stocks

From the July 14 close through Thursday, SK hynix Inc.'s Nasdaq-listed American depositary receipts, SKHY, fell 15.6%. Direxion Daily SK Hynix Bull 2X ETF —SKHL fell 24.0%. GraniteShares 2x Short SK Hynix Daily ETF —SKDD fell 11.7%. A 2x short did not turn a net decline in the ADR into a gain.

Thursday's post-effective amendment at Direxion Shares ETF Trust proposes to register the matching bear, plus 2x daily bull and bear funds on VanEck Rare Earth and Strategic Metals ETF AREMX and on the Bloomberg Trillions Index, and an unleveraged Direxion Trillions ETF TRLL. The prospectus says the information is incomplete and can change. None of the funds has started, the listing exchange is blank, and the paper says the shares cannot be sold until the registration statement is effective.

Six proposed funds, still a draft prospectus

The filing is Form 485APOS, a post-effective amendment used to add series to a trust already on file with the SEC. It proposed to become effective 75 days after filing under Rule 485(a)(2), on Tuesday, November 17, if nothing slips. It did not set a listing date.

The paper names six funds. Five target a one-day leveraged result before fees and expenses; TRLL would track the same index without a daily multiple:

The funds had not commenced operations, and the filing said financial information was unavailable. Several exhibits, including an amended advisory-agreement schedule, the fee-waiver schedule, the operating-expense-limitation exhibit, and counsel's opinion, were reserved for later amendment.

SKHS would enter a thin short book

—SKHL listed on July 15, seeking 200% of the daily performance of SKHY. It held $44.7 million as of Thursday's close and disclosed a 0.99% expense ratio. SKHY closed at $163.68, with a $1.16 trillion market capitalization.

The long side of that trade is already listed. GraniteShares 2x Long SK Hynix Daily ETF —SKUU, listed a day earlier, charges 1.50%. ProShares Ultra SK hynix —SKHU charges 1.04%.

Two -2x funds are already listed. —SKDD charges 2.20%. Tradr 2X Short SK hynix Daily ETF SKHN is also listed. Thursday's paper would add another issuer.

SKHS would, under its normal-course policy, keep at least 80% of net assets plus investment borrowings in instruments providing -2x daily inverse or short exposure to SKHY.

REML and REMS wrap a $2.23 billion metals ETF

Direxion Daily AREMX Bull 2X ETF REML and Direxion Daily AREMX Bear 2X ETF REMS would target +200% and -200% of the daily performance of AREMX, not a metals index of Direxion's own. AREMX held $2.23 billion and holds 34 stocks, with 62% of assets in the top 10. Over three months through Thursday it returned -21.6%. Over twelve months it returned 27.8%.

That is a volatile, concentrated global miners basket packaged as one ticker. A 2x daily fund on the ETF is a different product from the single-stock 2x funds already listed on individual rare-earth names. Global X Rare Earth & Critical Materials ETF BEART, a smaller unlevered peer, held $45.1 million.

Because REML and REMS are defined off another fund, acquired-fund fees sit outside the operating-expense cap. AREMX charges 0.53%.

A 0.95% cap, and an expense table of blanks

The distribution and service, or 12b-1, fee is 0.00%. The filing states an advisory fee of 0.75% of average daily net assets, but the management-fee, other-expense, acquired-fund-fee, and total-expense lines in the prospectus fee table are blank placeholders rather than final figures. So is the cap line in that table.

What the paper does commit to is an operating-expense limitation of 0.95% through September 1, 2028, excluding taxes, swap financing and related costs, acquired-fund fees and expenses, dividends or interest on short positions, other interest, brokerage commissions, and extraordinary expenses. Waivers may be recouped within three years. For a daily 2x fund, swap financing is not a footnote. The 0.95% figure is not an all-in cost.

A separate advisory fee-waiver schedule states 0.75% on the first $1.5 billion of average daily net assets, 0.70% on assets over $1.5 billion to $2 billion, 0.65% over $2 billion to $2.5 billion, 0.60% over $2.5 billion to $3 billion, and 0.55% over $3 billion. The waiver is not guaranteed after September 1, 2027. —SKHL is a $44.7 million fund. The schedule is written for a size none of these products has.

Bloomberg Trillions Index, constituents still blank

TRLL would track the Bloomberg Trillions Index without a daily multiple. TRIU would seek 200% of that index's daily performance; TRID would seek -200%. The filing says the index measures the world's largest publicly listed companies with a total market capitalization of at least $1 trillion, equal-weighted, rebalanced and reconstituted quarterly. It leaves the constituent count, the average market capitalization, and the as-of composition as blanks. The 2x funds would reset daily against whatever Bloomberg publishes under that name, once the registration is complete.