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Have you ever been interested in trading stocks priced between $2 and $5 per share but were hesitant to buy given liquidity and volatility risks?
Now, you can easily own a basket of these low-priced names thanks to a new exchange-traded fund (ETF) from Direxion.
The Direxion Low Priced Stocks ETF (ARCA: LOPX) may be a consideration for bargain-hunting investors who want to explore some of the lesser-known names on Wall Street in a risk managed and more diversified manner.
Oftentimes, buying and selling individual low-priced stocks can be a difficult endeavor, as they are known to be quite volatile, trade with low volume and don’t receive a lot of love from analysts.
Instead of trying to select individual names at low prices and potentially having to deal with large bid-ask spreads, looking into ETFs like this one may make a lot of sense.
With the Direxion Low Priced Stocks ETF, investors can gain exposure to 50 U.S.-listed companies trading between $2 and $5 at the time of annual reconstitution.
This exchange-traded fund seeks investment results, before fees and expenses, of the Solactive Two Bucks Index and offers exposure to a variety of different sectors.
As of June 30, 2021, the 50 constituents had a median total market capitalization of $1.3 billion,
with total market capitalizations ranging from $60 million to $29 billion, and was concentrated in
the energy and healthcare sectors.
Some of the ETF’s top holdings include AMC Entertainment Holdings (NYSE: AMC), Agenus Inc. (NASDAQ: AGEN), Tellurian Inc. (NASDAQ: TELL), and Moneygram International Inc. (NASDAQ: MGI). (For a list of Fund holdings and weightings please click HERE.)
Because many of these companies are neglected by Wall Street research, they could be ready to deliver outperformance if the market is indeed undervaluing their business prospects.
The idea here is that investors and traders who are interested in gaining broad exposure to stocks outside of traditional indexes can do so with the Direxion Low Priced Stocks ETF.
Although many of these stocks are priced between $2 and $5 for a reason, the fund offers an opportunity for intermediate-term traders and investors to take advantage of periods of volatility, as these stocks may be mispriced and have the potential for outperformance.
Keep that in mind if you are interested in adding bargain-priced companies with upside potential.
An investor should carefully consider a Fund’s investment objective, risks, charges, and expenses before investing. A Fund’s prospectus and summary prospectus contain this and other information about the Direxion Shares. To obtain a Fund’s prospectus and summary prospectus call 866-476-7523 or visit our website at direxion.com. A Fund’s prospectus and summary prospectus should be read carefully before investing.
CUSIP Identifiers have been provided by CUSIP Global Services, managed on behalf of the American Bankers Association by Standard and Poor’s Financial Services, LLC, and are not for use or dissemination in any manner that would serve as a substitute for a CUSIP service. The CUSIP Database, ©2011 American Bankers Association. “CUSIP” is a registered trademark of the American Bankers Association.
Shares of the Direxion Shares are bought and sold at market price (not NAV) and are not individually redeemed from a Fund. Market Price returns are based upon the midpoint of the bid/ask spread at 4:00 pm EST (when NAV is normally calculated) and do not represent the returns you would receive if you traded shares at other times. Brokerage commissions will reduce returns. Fund returns assume that dividends and capital gains distributions have been reinvested in the Fund at NAV. Some performance results reflect expense reimbursements or recoupments and fee waivers in effect during certain periods shown. Absent these reimbursements or recoupments and fee waivers, results would have been less favorable.
Direxion Shares ETF Risks – Investing involves risk including possible loss of principal. There is no guarantee the investment strategy will be successful. Stocks with a low trading price may be subject to short-term price movements and higher volatility. Further, low price securities may have limited liquidity and trade volume which may affect the Fund’s ability to purchase or sell a position at the time of reconstitution, or to purchase or sell the security without effecting the price of the security. Companies with low trading volume and/or low security prices may be seen to have a deteriorating company reputation comparted to those companies with greater market capitalization. Additional risks of the Fund include, but are not limited to, Index Correlation/Tracking Risk, Index Strategy Risk, Natural Disaster/ Epidemic and Market Disruption Risk, and risks associated with the market capitalizations and sectors of the securities in which the Fund may invest. Please see the summary and full prospectuses for a more complete description of these and other risks of the Fund.
Distributor: Foreside Fund Services, LLC.
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