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Is Direxion Monthly Emerging Markets Bull 2X Investor (DXELX) a Strong Mutual Fund Pick Right Now?

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If investors are looking at the Non US - Equity fund category, Direxion Monthly Emerging Markets Bull 2X Investor (DXELX - Free Report) could be a potential option. DXELX possesses a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

We classify DXELX in the Non US - Equity category, which is an area rife with potential choices. Investing in companies outside the United States is how Non US - Equity funds set themselves apart, since global funds tend to keep a good portion of their portfolio stateside. Many of these funds like to allocate across emerging and developed markets, and will often focus on all cap levels.

History of Fund/Manager

Direxion Funds is based in Newton, MA, and is the manager of DXELX. Direxion Monthly Emerging Markets Bull 2X Investor debuted in November of 2005. Since then, DXELX has accumulated assets of about $8.15 million, according to the most recently available information. Paul Brigandi is the fund's current manager and has held that role since November of 2005.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. DXELX has a 5-year annualized total return of 13.03% and is in the middle 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 10.48%, which places it in the middle 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. Compared to the category average of 38.1%, the standard deviation of DXELX over the past three years is 38.45%. The fund's standard deviation over the past 5 years is 33.62% compared to the category average of 32.04%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

The fund has a 5-year beta of 1.58, so investors should note that it is hypothetically more volatile than the market at large. 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. The fund has produced a negative alpha over the past 5 years of -8.99, which shows that managers in this portfolio find it difficult to pick 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.

This fund is currently holding about 78.88% stock in stocks and it has a negligible amount of assets in foreign securities. Turnover is 0%, which means, on average, the fund makes more trades per year than the comparable average.

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, DXELX is a no load fund. It has an expense ratio of 1.35% compared to the category average of 1.18%. So, DXELX is actually more expensive than its peers from a cost perspective.

Investors should also note that the minimum initial investment for the product is $25,000 and that each subsequent investment needs to be at $500.

Bottom Line

Overall, Direxion Monthly Emerging Markets Bull 2X Investor ( DXELX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and higher fees, this fund looks like a good potential choice for investors right now.

Don't stop here for your research on Non US - Equity 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 DXELX to its peers as well for additional information. Want to learn even more? We have a full suite of tools on stocks that you can use to find the best choices for your portfolio too, no matter what kind of investor you are.


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