ETF Report: Direxion Daily TSM Bear 1X Shares (TSMZ)

TSMZ is an inverse ETF designed to move in the opposite direction of a specific stock. This means if the underlying stock's price goes down, this ETF is designed to go up, and if the stock's price goes up, the ETF is designed to go down.

What the Numbers Show

The recent data for TSMZ shows a significant decline in value. The current price is $6.73. An estimated price from roughly one year ago was $12.95.

Looking at the returns:

• Year-to-Date (YTD): The price return is -44.44%, and the total return is -43.05%.

• One-Year: The price return is -48.02%, and the total return is -46.24%.

Price return measures only the change in the share price. Total return is a broader measure that includes the impact of distributions. In both cases, the fund has seen a steep decline over the last year.

Income and Distribution Explanation

TSMZ has paid out distributions four times in the last 12 months, usually on a quarterly basis. The trailing distributions total $0.32 per share, resulting in a distribution yield of approximately 4.71%.

It is important for new investors to remember that a distribution yield is not the same as a total return. While the fund provides some cash income, that income has not offset the large drop in the share price.

Price and NAV Erosion Explanation

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.

However, the price-based evidence is significant. TSMZ has a severe erosion-risk flag. This was triggered because of the split-adjusted price trend and an erosion score of 10, which is labeled as "severe price erosion." This means the market price of the ETF has deteriorated substantially.

Pros

• Provides a way for investors to bet against a specific stock without needing a margin account.

• Offers quarterly cash distributions.

Cons

• Has experienced severe price declines over the last year.

• Has an income rating grade of "F."

• The high distribution yield does not protect the investor from a falling share price.

Beginner Takeaway

TSMZ is an inverse fund, which is a specialized tool. The data shows that while it pays a distribution yield of 4.71%, the share price has fallen by about 48% over the last year. This highlights a key lesson: a high distribution yield can be misleading if the share price is falling rapidly. Investors often care about "principal stability," which means keeping the original money they invested safe. In this case, the severe price erosion indicates that the principal has declined significantly.