ETF Education Report: DIREXION DAILY MAGNIFICENT 7 BULL 2X SHARES (QQQU)

What this ETF is trying to do

The QQQU is an ETF that uses leverage. This means it is designed to amplify the movements of certain stocks. It focuses on a group of large companies often called the "Magnificent 7." Because it is a leveraged ETF, its price movements are intended to be larger than the standard movement of its underlying holdings.

What the numbers show

The current price of this ETF is $60.25. To understand how the price has changed, we can look at two different types of returns:

• Price Return: This measures only the change in the share price. The year-to-date (YTD) price return is approximately 6.98%. Over the last year, the price return was approximately 3.80%.

• Total Return: This includes both the price change and any cash distributions paid out. The YTD total return is approximately 7.11%. Over the last year, the total return was significantly higher at approximately 13.63%.

If you had looked at the estimated price from roughly one year ago, it was approximately $58.05.

Income and distribution explanation

This ETF pays out cash to investors, which is called a distribution. The distribution yield is approximately 8.91%. This number tells you how much cash was distributed relative to the current share price. Over the last 12 months, there were 4 distributions, which usually happen every three months (quarterly).

It is important to remember that a high distribution yield does not mean the investor earned that same percentage as total return. Total return is the most complete way to see how the investment performed overall.

NAV erosion explanation

"NAV erosion" is a term used to describe when the value of the underlying assets in an ETF decreases. Investors often care about this because they want their original investment (the principal) to stay stable while they collect income.

For this ETF, the erosion-risk score is 94, which is labeled as "Stable / sideways." The erosion severity is rated as "good," and there is no severe erosion-risk flag present.

Top Holdings

The ETF holds 7 total companies. Here are the top holdings:

• Microsoft Corp (6.54%)

• Meta Platforms Inc Class A (6.30%)

• Apple Inc (5.47%)

• Amazon.com Inc (5.32%)

• Nvidia Corp (5.22%)

• Alphabet Inc Class A (4.86%)

• Tesla Inc (4.44%)

*Note: Holdings can change over time.*

Pros

• The ETF provides a high distribution yield.

• The total return over the last year (13.63%) was higher than the price-only return (3.80%).

Cons

• This is a leveraged ETF, which means it can be more volatile than standard ETFs.

• The income rating grade is a "C."

Beginner takeaway

When looking at ETFs like QQQU, it is important to distinguish between price return and total return. While the share price might move a certain amount, the total return tells you the full picture by including cash distributions. Also, remember that high yields are not a guarantee of total profit.