What this ETF is trying to do

The DIREXION Daily Utilities Bull 3X Shares (UTSL) is a leveraged ETF. This means it is designed to provide three times the daily performance of its target index. It focuses on the utilities sector, which includes companies that provide electricity, gas, and water services. Because it is a leveraged fund, it is built for short-term goals rather than long-term holding.

What the numbers show

The data shows that the share price has experienced significant declines recently. The current price is $33.98. An estimated price from roughly one year ago was approximately $48.43.

Here is a breakdown of the returns:

• Year-to-Date (YTD) Price Return: -16.18%

• One-Year Price Return: -29.84%

• Three-Year Price Return: 96.64%

It is important to distinguish between price return and total return. Price return only tracks the change in the share price. Total return includes both the price change and any distributions paid out.

• YTD Total Return: -14.41%

• One-Year Total Return: -28.11%

• Three-Year Total Return: 110.45%

Income and distribution explanation

UTSL provides cash distributions to investors. The trailing distributions over the last year were $0.92 per share. This results in a distribution yield of approximately 2.72%. The fund usually pays these out quarterly, with four payments recorded in the last 12 months.

While some investors look for income, a high distribution yield does not guarantee that an investor will earn that percentage as a total return.

NAV erosion explanation

This ETF has a severe erosion-risk flag. This warning was triggered because the split-adjusted price trend and the erosion score show significant price deterioration. The fund has an erosion score of 30, which is labeled as "Significant price erosion."

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.

Top Holdings

The following are the top holdings in the portfolio (note that this is a partial list):

• DREYFUS GOVT CASH MAN INS: 19.81%

• UTILITIES SELECT SECTOR INDEX SWAP: 12.26%

• NEXTERA ENERGY INC (NEE): 8.92%

• SOUTHERN CO (SO): 5.31%

• GOLDMAN SACHS FIN GOV 465 INSTITUT: 5.03%

• DUKE ENERGY CORP (DUK): 4.84%

• CONSTELLATION ENERGY CORP (CEG): 3.71%

• AMERICAN ELECTRIC POWER CO INC (AEP): 3.62%

• SEMPRA (SRE): 2.99%

• DOMINION ENERGY INC (D): 2.97%

Holdings can change over time.

Pros

• The fund offers high potential for gains if the utilities sector moves upward quickly due to its 3X leverage.

• It has shown a strong three-year total return of 110.45%.

Cons

• The fund shows significant price erosion and carries a severe erosion-risk flag.

• Recent one-year and year-to-date returns have been negative for both price and total return.

• As a leveraged ETF, it is subject to different risks than standard ETFs.

Beginner takeaway

UTSL is a high-risk, leveraged tool designed for specific market movements. While it can provide large returns in good markets, the recent data shows significant share-price declines and a severe erosion-risk warning. Investors should remember that high distributions do not protect against a falling share price.