This is a leveraged product that tracks the daily performance of the FTSE China 50 Index at a multiple. The core idea is to capture short-term gains by exploiting the volatility of leading Chinese companies such as Alibaba and Baidu.

It suits aggressive investors with a high risk tolerance who expect a rebound in the Chinese market.

It is an actively managed ETF launched by Direxion in 2009.

To deliver a multiple of the underlying index's performance, the fund uses swap contracts and derivatives. Because positions are reset every day, holding the fund for a long period can lead to a growing gap between its returns and the index's returns, due to compounding effects and volatility decay.

• Leveraged exposure to large Chinese stocks
• High daily trading volume and liquidity

Assets under management (AUM) stand at $536.8M, and the expense ratio is 1.34% per year.

Given the nature of leveraged products, management fees are higher than those of typical ETFs, but liquidity is very abundant for those looking to take advantage of short-term volatility.

The fund shows extremely sharp price swings in response to announcements of Chinese government stimulus measures or changes in major macroeconomic indicators. In downturns, its structure means losses can expand very quickly because of the leverage multiple.

Depending on the outlook for the Chinese market, short-term speculative money flows in frequently, and large inflows tend to concentrate at moments when signs of a sustained rebound in Chinese equities appear.

Investors can expect amplified gains when the Chinese market rebounds, but the risk of volatility decay and the potential for heavily leveraged losses are both very large.

TQQQ, SOXL, and QLD, shown in the table, are representative leveraged alternatives in the US market. They track the Nasdaq or a semiconductor index, respectively, and their expense ratios are slightly lower than this product's. To stay focused on the Chinese market, you could instead consider the unleveraged index products FXI or MCHI. CWEB, a leveraged product more specialized in the Chinese internet sector, and its unleveraged counterpart KWEB are also good options. Conversely, if you want to bet on a decline in Chinese equities, the leveraged inverse product YANG is a direct alternative.

This ETF is a product with a special purpose, not a typical core holding or a vehicle for long-term investing. Before making an investment decision, you should carefully review the key checklist items below.

Highly leveraged products can cause enormous losses in a short period if your market call is wrong. Combined with the uncertainty of the Chinese market, volatility is extremely severe.

It is a tool suited to professional traders who want to bet on a rebound in Chinese equities. Rather than holding it for the long term, we recommend using it from a short-term perspective with strict risk management.