KORU Stock: Daily 3x Leverage and Compounding Explained
Understand what KORU tracks, why daily leverage differs from a holding-period multiple, and how to calculate a hypothetical return path.
KORU is a Direxion ETF targeting three times the daily performance of its Korean equity benchmark, rather than a share in an operating company. Its objective does not promise three times the benchmark’s cumulative return over any holding period.
Read the daily objective first
Check the issuer page and prospectus for the benchmark, daily objective, expenses, and derivatives disclosures. The target is before fees and expenses; actual returns can also differ because of tracking. Write down your intended holding period and examine daily moves rather than multiplying the final index change by three.
Calculate each day of the path
If the benchmark returns r in a day, an idealized daily 3x product returns 3r. Compound the factors 1+3r across days. Alternating gains and losses can leave a leveraged investment down even when the index returns to its starting value. Persistent trends also produce results different from a simple multiple of the entire period’s return.
Identify the underlying exposure and costs
Review benchmark constituents and sector weights to understand the companies driving exposure. Consider the difference between U.S. and Korean trading hours, bid-ask spreads, currency effects, and derivatives risks. High trading volume does not by itself establish suitability for a long holding period; calculate a loss scenario consistent with the period you intend to hold.
Hypothetical example
Hypothetical example: an index rises 10% from 100 to 110, then falls 9.0909% back to 100. An idealized daily 3x product, before costs and tracking differences, moves from 100 to 130 to about 94.55. The index is flat but the product loses about 5.45%. This is not KORU’s historical performance.
Research checklist
- Distinguish daily and holding-period objectives.
- Check the current benchmark and prospectus expenses.
- Calculate an alternating gain-and-loss path.
- Review spreads, currency exposure, and holding period.
Primary sources
Check the original filings and regulator records. This educational guide is not investment advice.