Is Direxion Monthly NASDAQ-100 Bull 2X Investor (DXQLX) a Strong Mutual Fund Pick Right Now?

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Looking for an Index fund? You may want to consider Direxion Monthly NASDAQ-100 Bull 2X Investor (DXQLX Free Report) as a possible option. DXQLX has no Zacks Mutual Fund Rank, but we have been able to look into other metrics like performance, volatility, and cost.

History of Fund/Manager

Direxion Funds is based in Newton, MA, and is the manager of DXQLX. Direxion Monthly NASDAQ-100 Bull 2X Investor made its debut in May of 2006, and since then, DXQLX has accumulated about $291.82 million in assets, per the most up-to-date date available. The fund is currently managed by Tony Ng who has been in charge of the fund since May of 2006.

Performance

Of course, investors look for strong performance in funds. DXQLX has a 5-year annualized total return of 40.79% and is in the top third among its category peers. If you’re interested in shorter time frames, do not dismiss looking at the fund’s 3-year annualized total return of 43.18%, which places it in the top third during this time-frame.

When looking at a fund’s performance, it is also important to note the standard deviation of the returns. The lower the standard deviation, the less volatility the fund experiences. DXQLX’s standard deviation over the past three years is 26.19% compared to the category average of 9.16%. Over the past 5 years, the standard deviation of the fund is 25.23% compared to the category average of 9.41%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors cannot discount the risks to this segment though, as it is always important to remember the downside for any potential investment. DXQLX lost 89.61% in the most recent bear market and outperformed its peer group by 43.06%. This might suggest that the fund is a better choice than its peers during a bear market.

Investors should not forget about beta, an important way to measure a mutual fund’s risk compared to the market as a whole. DXQLX has a 5-year beta of 2.31, which means it is likely to be more volatile than the market average. Because alpha represents a portfolio’s performance on a risk-adjusted basis relative to a benchmark, which is the S&P 500 in this case, one should pay attention to this metric as well. DXQLX has generated a positive alpha over the past five years of 6.11, demonstrating that managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.

Holdings

Investigating the equity holdings of a mutual fund is also a valuable exercise. This can show us how the manager is applying their stated methodology, as well as if there are any inherent biases in their approach. For this particular fund, the focus is primarily on equities that are traded in the United States.

Currently, this mutual fund is holding 90.68% stock in stocks and it has a negligible amount of assets in foreign securities. With turnover at about 0%, this fund makes fewer trades than the average comparable fund.

Expenses

Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, DXQLX is a no load fund. It has an expense ratio of 1.44% compared to the category average of 0.85%. From a cost perspective, DXQLX is actually more expensive than its peers.

This fund requires a minimum initial investment of $25,000, and each subsequent investment should be at least $500.

Bottom Line

Don’t stop here for your research on Index funds. We also have plenty more on our site in order to help you find the best possible fund for your portfolio. Make sure to check out www.zacks.com/funds/mutual-funds for more information about the world of funds, and feel free to compare DXQLX to its peers as well for additional information. And don’t forget, Zacks has all of your needs covered on the equity side too! Make sure to check out Zacks.com for more information on our screening capabilities, Rank, and all our articles as well.