ETF Report: Direxion Daily MSFT Bear 1X Shares (MSFD)

MSFD is an inverse ETF designed to move in the opposite direction of Microsoft's stock price. This means if Microsoft's stock price goes down, this ETF is designed to go up, and vice versa.

What the Numbers Show

The recent data shows a decline in the share price of MSFD. The current price is $9.57. An estimated price from roughly one year ago was $10.71.

Looking at the returns, the share-price movement (price return) has been negative over several timeframes:

• Year-to-Date: -16.92%

• One Year: -10.67%

• Three Year: -46.29%

When distributions are included, the total return is slightly higher but still negative. The one-year total return was -7.73%, and the three-year total return was -39.83%.

Income and Distribution Explanation

MSFD provides cash distributions to its investors. Over the last 12 months, it has paid out 4 times, usually on a quarterly basis. The distribution yield is 4.35%.

It is important for beginners to remember that a distribution yield is not the same as a total return. While the ETF pays out cash, the share price has declined. In this case, the total return is lower than the distribution yield because the drop in share price outweighed the cash payments.

Price Erosion Explanation

This ETF has an erosion-risk score of 75, which is labeled as "mild price erosion." This is a measurement of how the share price has trended over time.

The supplied data is sufficient to evaluate price erosion, but it does not include enough historical NAV-per-share data to confirm or rule out NAV erosion. NAV erosion happens when the actual value of the fund's underlying assets drops over time.

Pros

• Inverse Strategy: It provides a way for investors to seek gains when Microsoft's stock price falls.

• Regular Income: The fund has a history of making quarterly distributions.

Cons

• Negative Returns: Both the price return and total return have been negative over the short and long term.

• Price Decline: The fund has a "mild" price erosion-risk label.

• Low Income Grade: The fund has an income rating grade of "D."

Beginner Takeaway

MSFD is an inverse fund, meaning it bets against a specific company. While it offers a distribution yield of 4.35%, the total return has been negative over the last three years. This shows that high distributions alone can be misleading if the share price is falling. Investors typically look for principal stability to ensure their original investment is protected while they collect income.