DXKSX - Direxion Mthly 10 Year Note Bear 2X

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Direxion Mthly 10 Year Note Bear 2X (DXKSX)
Expense Ratio: 1.97%
Expected Lifetime Fees: $53,096.47

The Direxion Mthly 10 Year Note Bear 2X fund (DXKSX) is a Trading-Inverse Debt fund started on 5/17/2004 and has $27.30 million in assets under management. The current manager has been running Direxion Mthly 10 Year Note Bear 2X since 6/9/2004. The fund is rated by Morningstar. In addition to trading fees and broker commissions, this fund has 12b-1 fees of 0.25%

MarketRiders Prefers The Following ETF

ProShares Short 20+ Year Treasury (TBF)
Expense Ratio: 0.95%
Expected Lifetime Fees: $28,436.39

The ProShares Short 20+ Year Treasury (TBF) is an Exchange Traded Fund. It is a "basket" of securities that index the Trading-Inverse Debt investment strategy and is an alternative to a Trading-Inverse Debt mutual fund. Fees are very low compared to a comparable mutual fund like Direxion Mthly 10 Year Note Bear 2X because computers automatically manage the stocks.

The Following Trading-Inverse Debt Funds Have Lower Fees Than Direxion Mthly 10 Year Note Bear 2X (DXKSX). Why are these metrics important?
Mutual Fund Name Ticker Symbol Turnover Assets (M) Annual Fees
ProFunds Rising Rates Opp Inv RRPIX 1.0% 109 1.58%
Rydex Inverse Gov Long Bond Strategy A RYAQX 1.0% 295 1.67%
Rydex Inverse Gov Long Bond Strategy Inv RYJUX 1.0% 295 1.42%

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Why Are These Metrics Important?

Turnover represents how much of a mutual fund's holdings are changed over the course of a year through buying and selling. Active mutual funds have an average turnover rate of about 85%, meaning that funds are turning over nearly all of their holdings every year. A high turnover means you could make lower returns because: 1) buying and selling stocks costs money through commissions and spreads and 2) the fund will distribute yearly capital gains which increases your taxes. Look for funds with turnover rates below 50%. For comparison, ETF turnover rates average around 10% or lower.

Generally, smaller funds do better than larger ones. The more assets in a mutual fund, the lower the chance that it will beat its index. Managers outperform an index by choosing stocks that are undervalued. In order to find these undervalued stocks, the manager has to know more than his competitors to develop an "edge." There are only a finite number of stocks a mutual fund manager can reasonably analyze and actively track to gain such a competitive edge. When the fund has more assets, the manager must analyze large companies because he needs to take larger positions. Large companies are more efficiently priced in the market and it becomes increasingly difficult to get an edge.