Direxion Daily BABA Bull 2X ETF (BABU)

This exchange-traded fund from Direxion seeks daily investment results, before fees and expenses, equal to two times the daily percentage change in the share price of Alibaba Group (BABA). It is a single-stock leveraged product: rather than holding a diversified portfolio, it obtains its exposure mainly through swap agreements and other derivatives referencing Alibaba Group common stock, along with cash and short-term instruments held as collateral.

The underlying company: Alibaba Group, based in Hangzhou, China, operates e-commerce marketplaces such as Taobao and Tmall, a large cloud computing business, logistics services and a range of digital media and local services platforms.

Because the fund resets its leverage every trading day, its stated two multiple applies only to one-day returns. Over longer holding periods, compounding of daily results means performance can differ substantially from two times the stock's cumulative return, particularly when the share price is volatile.