This ETF seeks to deliver a leveraged multiple of the daily performance of the Energy Select Sector Index. It provides amplified daily exposure to the energy sector, which is made up of US oil, gas, and energy equipment and services companies.

It suits experienced traders who want to make an aggressive bet on the short-term direction of the energy sector, and it is not recommended for long-term investors.

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

To magnify the daily return of the energy sector index by a leverage multiple, the fund invests most of its assets in derivatives such as swap contracts and index-tracking ETFs. Because positions are readjusted at each trading day's close to maintain the target leverage ratio, the exposure is accurate only on a daily basis.

• Daily leveraged exposure to the energy sector
• A structure specialized for short-term directional trading

Assets under management (AUM) stand at $281.2M, and the expense ratio is 0.91% per year.

Because of the daily reset structure, the gap in returns versus the underlying index can accumulate the longer the fund is held, so it is meant to be used for the short term.

Volatility is high, driven by oil prices and the earnings of energy companies, and the leveraged structure makes its swings wider than those of the underlying index. Returns can diverge significantly depending on the trend direction and volatility.

Short-term money tends to flow in when energy prices are fluctuating or sector momentum is strong. The impact on each sector can differ depending on oil prices, geopolitical issues, and the interest rate environment, so fund flows also change quickly.

Its strength is amplified exposure to the short-term direction of the energy sector, while the risks of daily resets and volatility decay are its weaknesses.

Another product that tracks the same energy sector with daily leverage is GUSH, and if you want non-leveraged exposure, you can also consider XLE, a broad energy ETF. To bet on the opposite direction, there are ERY and DRIP, which track the energy sector inversely, and to focus on oil services companies, OIH is also worth comparing. Within the same leveraged ETF category, products with exposure to broader indexes include TQQQ and QLD based on the Nasdaq 100, SPXL and SSO based on the S&P 500, and SOXL in the semiconductor sector, and these differ in tracked index, expense ratio, and leverage multiple.

Here are the points to review before investing in ERX. Leveraged ETFs have a different risk structure from regular ETFs, so you should thoroughly check the holding period, volatility, and cumulative cost burden in advance.

Because of the leverage and daily reset structure, return divergence and volatility losses can accumulate over a long holding period. With its concentration in the single energy sector, the fund is fully exposed to oil price and policy shocks, so losses can be large even in the short term.

It is a tool suited to experienced traders who want to bet on the short-term direction of the energy sector. If your goal is long-term diversified investing, XLE, a non-leveraged energy ETF, is a more appropriate choice.