This is a leveraged ETF designed to track three times the daily return of a US regional bank index. It uses derivatives to reflect short-term moves in the regional bank sector at an amplified magnitude, and its exposure is reset on a daily basis.

It suits active traders who want to place leveraged bets on the short-term direction of the regional bank sector and investors willing to accept very high risk.

It is a passive (index-tracking) ETF managed by Direxion.

The fund builds its exposure with derivatives to track three times the daily return of a US regional bank index, and it resets its leveraged exposure every day. Because of the daily reset structure, a prolonged period of high volatility creates a compounding effect, causing cumulative returns to differ significantly from a simple three times the index return.

• Daily 3x leverage on the regional bank index
• Leverage structure that is reset every day

Assets under management (AUM) stand at $311.2M, and the expense ratio is 0.92% per year.

The main points of comparison are the leverage multiple and volatility relative to KRE, which invests in regional banks without leverage.

Leveraged sector products amplify index moves, so they generally deliver large gains in rising markets and large losses in falling markets. Regional banks are sensitive to interest rates, credit and deposit conditions, so volatility is high and the leverage effect can be even more pronounced.

Fund flows into and out of leveraged products swing widely depending on demand for short-term directional bets, and short-term trading money sometimes flows in when regional bank momentum strengthens. It is also worth noting that performance can vary significantly depending on the volatility environment.

The potential for short-term leveraged gains is both its strength and its risk, and the compounding effect of the daily reset and the high volatility inherent to regional banks are key considerations.

For regional bank exposure without leverage, direct substitutes include KRE, and for broader banking sector exposure, products such as KBE are also worth comparing. To focus on large banks, products such as KBWB can also be considered. The three products shown in the table, SOXL, TQQQ and SSO, track leveraged exposure to indexes such as semiconductors, the Nasdaq and the S&P 500, so their underlying indexes are different. What sets this ETF apart is its leveraged structure that tracks three times the daily return of the regional bank index.

Here are the points to review before investing in DPST. The potential for short-term leveraged gains is attractive, but amplified losses, the compounding effect and unsuitability for long-term holding should be confirmed in advance. It is best to approach the fund only after fully understanding its leverage structure.

Amplified losses when the index falls and the compounding effect of the daily reset are the main variables for performance, and regional banks are highly volatile because they are sensitive to interest rates and deposit conditions. Leveraged products are unsuitable for long-term holding and carry a high risk of principal loss.

It is a suitable candidate for risk-tolerant traders who want to place leveraged bets on the short-term direction of the regional bank sector. For investing without leverage, consider a product such as KRE, and for a short-term leveraged bet, it is advisable to choose this product only after fully understanding its structure.