New Leveraged and Inverse ETFs Launched by Direxion

By Suzanne McGee

(Reuters) – Direxion announced on Wednesday the launch of new leveraged and inverse exchange-traded funds (ETFs) linked to two stocks: Palantir Technologies (NASDAQ:PLTR) and Warren Buffett's Berkshire Hathaway (NYSE:BRKa). These ETFs provide traders the opportunity to gain twice the daily upside movement of each stock or profit from the inverse of a daily decline.

Analysts noted the contrasting dynamics of these two stocks. Palantir is characterized by high volatility and significant trading activity, similar to other successful stocks in the leveraged ETF market, such as Nvidia (NASDAQ:NVDA), MicroStrategy, and Tesla (NASDAQ:TSLA). In contrast, Berkshire Hathaway exhibits low volatility.

"Palantir is very, very actively traded and volatile, which appeals to those trading leveraged ETFs," said Todd Sohn, ETF analyst at Strategas. He added that while Berkshire Hathaway is large and has performed well compared to the market, it does not provide the same level of excitement.

Ed Egilinsky, head of sales and distribution, remains optimistic about Berkshire Hathaway's appeal to day traders despite its low volatility. He suggested that potential news regarding the future of 94-year-old Buffett could spark interest, as traders may have strong opinions on his successors’ ability to maintain the company’s track record.

The market for leveraged ETFs has surged this year, with the number of such funds more than doubling from 20 to 48 in 2024. Inflows have skyrocketed from $83 million in November 2023 to $2.38 billion last month.