LABU: The Risks And Rewards Of A Leveraged Biotechnology ETF
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Fred PiardInvesting Group LeaderFollow5ShareSavePlay(13min)CommentsSummaryThe Direxion Daily S&P Biotech Bull 3X Shares ETF (LABU) offers 3x daily leveraged exposure to the S&P Biotechnology Select Industry Index.LABU is highly liquid and popular among short-term traders, but long-term holders face significant decay from volatility and compounding effects.LABU's annualized drift averages -21.5%, making it unsuitable for buy-and-hold investors; timing and discipline are critical.Traders should base analysis on the underlying index (XBI), as LABU's price action is distorted by leverage-induced drift. TanyaJoy/iStock via Getty Images Fast Facts About the Direxion Daily S&P Biotech Bull 3X ETF The Direxion Daily S&P Biotech Bull 3X Shares ETF (LABU) is a leveraged ETF with a factor of 3 in the biotechnology industry and it was launched onThis article was written byFred Piard16.24K FollowersFollowFred Piard, PhD. is a quantitative analyst and IT professional with over 30 years of experience working in technology. He is the author of three books and has been investing in data-driven systematic strategies since 2010. Fred runs the investing group Quantitative Risk & Value where he shares a portfolio invested in quality dividend stocks, and companies at the forefront of tech innovation. Fred also supplies market risk indicators, a real estate strategy, a bond strategy, and an income strategy in closed-end funds. Learn more.Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.