At a glance
FAZ charges 1.03% a year, above the 0.95% average of the 2 funds most like it. It has $94.6M in assets, the largest of that group; it paid 2.85% of its price in distributions over the past 12 months, quarterly. Over the past year it returned −15.0% with distributions reinvested (S&P 500: +11.5%), the weakest of those 3 funds; over three years it returned −45.4% a year. At its worst it fell 18.9% in the 2020 crash (S&P 500: 33.7%) and 40.0% in the 2022 bear market (S&P 500: 24.5%).
The short version
Direxion Daily Financial Bear 3X Shares (FAZ) aims to return three times the opposite of the Financial Select Sector Index's move, but only for a single day. It gets that exposure mainly through swap contracts, not by owning bank and insurance stocks. It is the largest of three similar inverse financials funds and the most aggressive. Its 1.03% expense ratio is above the 0.95% charged by ProShares Short Financials (SEF).
Price history
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FAZ -15.0% over the year to Oct 27, 2026, total return with distributions reinvested.
How it has behaved
| YTD | 1 yr | 3 yr | 5 yr | 10 yr | Since start | |
|---|---|---|---|---|---|---|
| FAZ official prospectus, to Dec 31, 2025 | — | -37.18% | — | -40.40% | -44.65% | — |
| FAZ price data to Oct 27, 2026 | -8.0% | -15.0% | -45.4% | -26.9% | -43.5% | -53.7% |
- Over the year to Oct 27, 2026, FAZ returned -15.0%, 3rd of 3 among similar funds.
- Its 5-year annualized return was -26.9% and its 10-year -43.5%.
- In the 2020 COVID crash, while stocks fell, it gained 208.1%.
- Its worst full calendar year was 2009 (-94.6%); its best was 2018 (+16.8%).
- The deepest fall in its price history was 100% (Nov 20, 2008 to Sep 3, 2026), not yet recovered.
Show as a table
| Year | Price data | Prospectus (official) |
|---|---|---|
| 2026 (to date) | -8.0% | — |
| 2025 | -38.2% | -37.18% |
| 2024 | -51.1% | -51.10% |
| 2023 | -26.6% | -26.53% |
| 2022 | +1.2% | +1.26% |
| 2021 | -65.7% | -67.11% |
| 2020 | -73.9% | -73.83% |
| 2019 | -58.6% | -58.65% |
| 2018 | +16.8% | +16.27% |
| 2017 | -46.2% | -46.10% |
| 2016 | -47.3% | -47.08% |
| 2015 | -18.8% | — |
| 2014 | -41.1% | — |
| 2013 | -64.4% | — |
| 2012 | -59.5% | — |
| 2011 | -21.0% | — |
| 2010 | -51.4% | — |
| 2009 | -94.6% | — |
| 2008 financial crisis stocks fell Oct 9, 2007 – Mar 9, 2009 | Before this security existed |
|---|---|
| 2020 COVID crash stocks fell Feb 19, 2020 – Mar 23, 2020 | Gained 208.1% over that stretch · deepest drop along the way 18.9%, back to its old high 0 months after the low |
| 2022 bear market stocks fell Jan 3, 2022 – Oct 12, 2022 | Gained 60.6% over that stretch · deepest drop along the way 40%, not recovered by the end of the data |
Dividends and income
Show as a table
| Year | Per share | Change |
|---|---|---|
| 2026 (to date) | $0.8300 | |
| 2025 | $1.2400 | -73.0% |
| 2024 | $4.6000 | -31.3% |
| 2023 | $6.7000 | +6600.0% |
| 2022 | $0.1000 | -96.7% |
| 2020 | $3.0769 | -91.3% |
| 2019 | $35.3846 | +31.4% |
| 2018 | $26.9231 |
What's inside
As of Jul 31, 2026, most of the fund sat in cash, Treasury bills and money-market holdings (98.5% of net assets), with its inverse exposure coming from 5 swap and futures positions rather than from owning the stocks outright.
| Holding | Weight |
|---|
By country
By asset type
What changed recently
- Over the three months to Jul 31, 2026, investors added a net $246K (creations minus redemptions, per the N-PORT report).
- Monthly total returns reported for that quarter: +4.01%, -11.91%, -16.45%.
How it works
FAZ is built around the Financial Select Sector Index from S&P Dow Jones Indices, one of eleven Select Sector Indexes. The index holds S&P 500 companies in banking, insurance, capital markets, financial services, consumer finance and mortgage real estate investment trusts (REITs). As of December 31, 2025, it had 76 members. Larger companies get bigger weights, but the largest positions can be trimmed to meet federal tax rules. The index is rebalanced quarterly.
FAZ does not own these stocks. Instead it mostly uses swaps, which are contracts with a financial firm that pay the fund when the index falls and cost it money when the index rises. It may also use futures or short sales. As of July 31, 2026, 98.5% of the fund was in cash and similar holdings, alongside five swaps on the index. If a swap partner fails to pay, the fund can lose money.
At each market close, Rafferty Asset Management resets the fund's exposure back to -3 times the index. Because of this daily reset, returns over weeks or months compound and can stray far from -3 times the index's move. The prospectus warns that the fund will lose money if the index ends flat over time. It can even lose money while the index falls. The fund also creates and redeems shares mostly in cash, which makes it less tax efficient than most ETFs.
What it really costs
- FAZ charges 1.03% a year, versus an average of 0.95% for the similar funds below.
- Of that, 0.75% is the management fee; the rest covers other fund expenses.
- Using the prospectus's standard example, $10,000 invested would cost about $105 in the first year and $1,259 over 10 years (assuming a 5% annual return).
| Cost of $10,000 (SEC example) | 1 yr | 3 yrs | 5 yrs | 10 yrs |
|---|---|---|---|---|
| FAZ | $105 | $328 | $569 | $1,259 |
Structure and tax notes
- Resets its inverse exposure every day. Over periods longer than a day, compounding means returns can differ sharply from -3× the index — usually worse in choppy markets. Built for short-term trading, not buy-and-hold.
In a retirement portfolio
Its -3x exposure resets every day, and over long periods it has lost nearly all of its value.
FAZ can jump when financial stocks plunge. It gained 208.1% from the market's February 19, 2020 peak to its March 23 low, and 60.6% during the 2022 bear market. It launched on November 6, 2008, so its record misses most of the 2008 crisis. Those gains faded fast. FAZ ended 2020 down 73.83% and lost 94.6% in 2009. From November 20, 2008 to September 3, 2026, it lost nearly all of its value and did not recover.
For someone drawing money in a bad year, a hedge that isn't cashed out within days or weeks can quickly become a loss. The 2.85% trailing yield, paid quarterly (as of October 27, 2026), does little to offset that. Costs come to $105 in the first year on $10,000 under the SEC's standard example. Past results don't predict the future, and a plan should look at the whole portfolio, not one fund.
Who it may suit — and who should look elsewhere
May suit
- Active traders who want three times the opposite of a single day's move in large US financial stocks and who check their positions daily.
- Traders hedging against a sudden, steep drop in banks and insurers, like early 2020, when FAZ gained 208.1% from the market's peak to its low.
- Short-term traders who want the largest of three inverse financials funds: $94.6 million in net assets as of July 31, 2026.
Look elsewhere if
- Retirement savers looking for something to hold for years: FAZ lost an average of 44.65% a year over the 10 years ending December 31, 2025.
- Anyone wanting a milder bet against financials: SEF offers -1x daily exposure at a 0.95% expense ratio, compared with FAZ's 1.03%.
- Income seekers: the 2.85% trailing yield as of October 27, 2026 is small next to 42.8% one-year volatility and steep long-run losses.
Close alternatives
Matched by leveraged/inverse funds on the same index (financials), same direction.
Net assets from each fund's latest N-PORT or annual report where available. Returns through Oct 27, 2026.Questions investors ask
Is FAZ a good long-term investment?
FAZ is not designed for long-term holding. The prospectus says it seeks -3x the index's return for a single trading day only. Over the 10 years ending December 31, 2025, it lost an average of 44.65% a year. From 2016 through 2025, it rose in only two calendar years: 16.27% in 2018 and 1.26% in 2022. Daily resets and compounding wear away its value over long periods, even when financial stocks drop for a while.
Why does FAZ lose value over time even when bank stocks fall?
The cause is the daily reset. Each day the fund rebalances to -3 times the index, so its long-term result is many daily returns compounded together, not -3 times the index's total move. In choppy markets, those up-and-down swings eat into the fund's value. The prospectus warns that FAZ will lose money if the index ends flat over time. It can even lose money while the Financial Select Sector Index falls.
What's the difference between FAZ and SKF?
Both bet against the same financials index each day, but SKF from ProShares uses -2x exposure and FAZ uses -3x. As of October 27, 2026, FAZ's one-year price return was -15%, compared with -8.2% for SKF. Over three years, FAZ lost 45.4% a year and SKF lost 31.1% a year. FAZ is much larger: $94.6 million in net assets as of July 31, 2026, against about $11.2 million for SKF. ProShares Short Financials (SEF) offers -1x exposure for 0.95% a year.
Does FAZ pay dividends?
Yes. FAZ pays distributions quarterly. Its trailing 12-month yield was 2.85%, or $0.99 per share, as of October 27, 2026. That income is small next to the fund's price swings: its one-year volatility was 42.8% as of that date. Because the fund creates and redeems shares mostly for cash, the prospectus says it is not expected to be tax efficient. That can matter in a taxable account.
How did FAZ do during the 2020 stock market crash?
It rose sharply, then gave it back. From the market's February 19, 2020 peak to its March 23 low, FAZ gained 208.1%. But it still ended 2020 down 73.83%, and its worst quarter was a 53.36% drop in the quarter ending June 30, 2020. The 2022 bear market followed a similar pattern. FAZ gained 60.6% during that decline and had its strongest quarter, up 56.87%, ending June 30, 2022. It still finished the year up just 1.26%.