 ERX
is an exchange-traded fund (ETF) that seeks daily investment results,
before fees and expenses, of 200% of the performance of the Energy
Select Sector Index. The Energy Select Sector Index is a modified
market capitalization-weighted index that includes companies in the
oil, gas and consumable fuels; and energy equipment and services
industries.
ERX is managed by Direxion, a company that offers a
range of leveraged and inverse ETFs designed to amplify or inverse the
daily returns of their underlying index or benchmark. As a leveraged
ETF, ERX is designed to provide double the daily returns of the Energy
Select Sector Index, meaning it is designed to go up 2% if the index
goes up 1% and go down 2% if the index goes down 1%.
Due to its
leverage, ERX is considered to be a high-risk, high-reward investment
vehicle and may not be suitable for all investors, particularly those
with a low tolerance for risk. Additionally, it is important to note
that because ERX seeks to provide 2x the daily returns of the Energy
Select Sector Index, it may not be appropriate for long-term
investments, as the compounding effect of daily returns can lead to
significant deviations from the expected returns over longer holding
periods.
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