Monday, July 29, 2013

Why FAZ Is Poised to Keep Falling

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, the Direxion Daily Financial Bear 3X Shares (NYSE: FAZ) have received the dreaded one-star ranking.

With that in mind, let's take a closer look at FAZ and see what CAPS investors are saying about the ETF right now.

FAZ facts




November 2008

Total Net Assets

$551.5 million

Investment Approach

The investment seeks daily investment results of 300% of the inverse (or opposite) of the performance of the Russell 1000 Financial Services Index. The fund, under normal circumstances, creates short positions by investing at least 80% of its assets in financial instruments that, in combination, provide leveraged and unleveraged exposure to the index.

Expense Ratio


Year-to-Date / 1-Year / 3-Year Return

(53.4%) / (69.4%) / (53.1%)


ProShares Short S&P 500 

ProShares UltraShort QQQ 

ProShares UltraShort MSCI Europe 

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 85% of the 410 All-Star members who have rated FAZ believe the ETF will underperform the S&P 500 going forward.

Just last week, one of those Fools, TerryHogan, touched on the trends working against FAZ:

I like the financials in the US right now. There's going to be some consolidation until you end up with your few big nationwide guys, similar to the situation in Canada. It just makes sense from a business standpoint and a consumer standpoint. If I move from Flint Michigan to Austin Texas, it's nice if I don't have to switch banks. And if you're a bank, it's nice not to only be operating in Flint.

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