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The TMF ETF uses complex financial instruments, such as options, swaps, and its own proprietary trading methods, to deliver a leveraged return on the U.S. bond market. It's like betting that long-term U.S. Treasury bonds will go up but with the potential for triple the gains (or losses) in a single day due to leverage.
The Direxion Daily 20+ Year Treasury Bull 3X Shares is a leveraged ETF that seeks to deliver three times the daily performance of the ICE U.S. Treasury 20+ Year Bond Index. This index includes publicly issued U.S. Treasury securities with maturities greater than 20 years.
This fund is designed for investors with a bullish outlook on long-term U.S. Treasuries. However, as with other leveraged ETFs, it's intended for short-term trading rather than long-term holding due to its leveraged nature.
To buy any stock or ETF, including Direxion Daily 20+ Year Treasury Bull 3X Shares, you need to follow a few simple steps.
Direxion Daily 20+ Year Treasury Bull 3X Shares' holdings primarily consist of U.S. Treasury bonds with maturities of over 20 years. The fund uses derivatives, including futures contracts and swap agreements, to achieve its leveraged exposure. According to Direxion's latest data, the index consists of bonds with the following time to maturity:
Let's say, for example, Direxion starts by buying 10 U.S. Treasury bonds at $1,000 each, totaling $10,000. To amplify the returns, the fund enters into futures contracts worth $20,000, leveraging an additional $20,000 to increase its exposure to the Treasury bonds. This brings the total exposure to $30,000.
If the underlying index moves up by 1% in a day, the $30,000 leveraged position will gain 3% of the initial investment ($10,000), resulting in a $300 gain. Conversely, if the index drops by 1%, the leveraged position would result in a $300 loss, demonstrating the amplified risk of using leverage.
Here are some considerations before you invest money in the TMF ETF.
You think interest rates will drop. When interest rates fall, the prices of existing bonds rise because their higher fixed-interest payments become more attractive compared to new bonds issued at lower rates. Since this fund is designed to triple the daily performance of long-term U.S. Treasuries, falling interest rates can significantly boost its returns.
You like the management flexibility of the ETF structure. ETFs hold a pool of assets that closely track a specific sector or subsector. In this case, the assets are more or less the same but with different financial contracts and derivatives. Trading financial derivatives can be extremely complicated for retail investors.
You want a hedge against the volatility and possible crash of the stock market. Direxion can serve as a hedge against equity market downturns and even stock market crashes. When stock markets are volatile or declining, investors often seek the safety of U.S. Treasury bonds, which can increase the fund's value. For example, due to the financial meltdown during the 2008 global financial crisis, money from around the world went into U.S. Treasury bonds, considered one of the safest assets in existence.
You think U.S. debt is out of control. Many individuals feel the U.S. debt is already out of control and could lead to fiscal instability if it continues down the same path. This could result in higher interest rates, which, as mentioned, lead to lower Treasury bond prices, and that could have a detrimental effect on the fund.
You are a long-term investor. Direxion is more geared toward short-term investors who want to take advantage of fluctuations in the interest rate environment. For those looking to contribute to something more geared toward long-term investing and retirement, ETFs tied to indexes, such as the S&P 500 or MSCI Global Index, might be more suitable.
Direxion pays a dividend. As of the time of this writing, recent dividends have included $0.40537 per share (September 2025), $0.36167 (June 2025), $0.28788 (March 2025), and $0.31979 (March 2024).
Direxion's expense ratio is 0.91%, higher than the average for similar ETFs. The expense ratio represents the annual fee investors pay to cover the fund's operating expenses. For example, if you were to invest $10,000 in the fund, you would pay $91 annually in expenses. Higher expense ratios can affect overall returns, especially over the long term.
This fund's historical performance can be volatile due to its leveraged structure. Here's a summary of its performance over different periods:
Time Period | Performance |
|---|---|
1 year | -27.51% |
3 years | -19.85% |
5 years | -35.28% |
10 years | -13.47% |
These figures illustrate the ETF's potential for significant short-term gains and highlight the risks associated with leveraged investments. Due to the compounding effects of leverage, long-term performance may not be as favorable.
Leveraged ETFs, such as the Direxion Daily 20+ Year Treasury Bull 3X Shares, are rebalanced daily to maintain a fixed leverage ratio, such as 2 times or 3 times the daily performance of the target index.
Daily rebalancing means gains or losses from each day are compounded, affecting the ETF's overall performance. As we saw above, a 1% gain in the index translates to a 3% gain in a 3x leveraged ETF, and a 1% loss results in a 3% loss.
While this can lead to significant short-term gains, long-term performance can suffer due to volatility drag, where daily fluctuations erode returns. So, leveraged ETFs are generally not suitable for long-term investing.
Investing in the Direxion Daily 20+ Year Treasury Bull 3X Shares can be a powerful tool for traders with a strong, short-term, bullish outlook on U.S. Treasuries. However, due to its leveraged nature, it is crucial to understand the risks and actively manage this investment.
Direxion offers the potential for amplified gains, but it also comes with higher volatility and a higher expense ratio. As with any investment, thorough research and a clear understanding of your risk tolerance are essential before making a decision.
Investing in leveraged exchange-traded funds (ETFs) can be an attractive option for those looking to amplify their returns through short-term market movements. One of the more popular ETFs for this is the Direxion Daily 20+ Year Treasury Bull 3X Shares (TMF -1.65%).
