This is a leveraged ETF designed to track 3 times the daily return of the MSCI Emerging Markets Index. It is based on large- and mid-cap stocks from 24 emerging market countries and builds its 3x exposure with derivatives such as swaps.

It suits active traders who want to bet on the short-term direction of emerging markets and is not recommended for long-term investors.

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

When the MSCI Emerging Markets Index rises for a day, the fund seeks 3 times that gain, and when it falls, 3 times the loss. Rather than holding the index stocks directly, it gains exposure through derivatives such as swaps. The leverage is reset after the market closes each day, so path-dependent compounding effects build up when the fund is held over multiple days.

• 3x daily leveraged exposure to an emerging markets index
• Derivatives-based structure with a daily reset

Assets under management (AUM) stand at $121.3M, and the expense ratio is an annual 1.09%.

Because of its daily leverage design, long-term returns can deviate significantly from 3 times the index, unlike an unleveraged ETF that simply tracks the same index.

Depending on the direction and volatility of emerging markets equities, price swings are much larger than those of the underlying index, and in sideways markets the value erosion from daily resets tends to accumulate. Gains are amplified when a trend is clear, but losses are also amplified in volatile periods.

Short-term trading demand drives fund flows: inflows grow when appetite for emerging markets risk rises, and money tends to leave quickly in risk-off phases. A strong dollar or weak emerging market currencies can weigh on investor sentiment.

Its strength is the chance to pursue amplified returns from short-term emerging markets rallies, while compounding risk from daily resets and high fees are its drawbacks.

The same daily leveraged category includes 3x and 2x products that track US indexes or sectors, such as TQQQ, SOXL, QLD, SSO and SPXL shown in the table. They differ only in what they track and share the same daily reset structure and high fee profile. To bet in the opposite direction, EDZ, Direxion's emerging markets inverse 3x product, can be viewed as its counterpart, and to reduce the leverage level, the 2x product EET is also an option. For diversified emerging markets exposure without leverage, unleveraged core ETFs such as EEM and VWO are alternatives.

These are the key points to review before investing in this ETF. Because the risk profile of a leveraged ETF differs greatly from that of a regular ETF, it is important to fully check the holding period and structure in advance.

Because of the compounding effect of daily leverage resets, losses can grow quickly when the fund is held over multiple days, and the volatility and currency swings specific to emerging markets add to the risk. In highly volatile periods, the fund's value can shrink even if the index ends up unchanged.

This ETF is a tool for active traders who want an amplified bet on the short-term direction of emerging markets. If your goal is long-term investing, unleveraged emerging markets ETFs such as EEM and VWO are more suitable.