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The Zacks Analyst Blog Highlights: DUST, GASX, ERY, DRV and DRIP
Read MoreHide Full Article
For Immediate Release
Chicago, IL – March 2, 2018 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Direxion Daily Gold Miners Index Bear 3x Shares (DUST - Free Report) , Direxion Daily Natural Gas Related Bear 3X Shares , Direxion Daily Energy Bear 3x Shares ETF (ERY - Free Report) , Direxion Daily MSCI Real Estate Bear 3X Shares (DRV - Free Report) and Direxion Daily S&P Oil & Gas Exp. & Prod. Bear 3X Shares (DRIP - Free Report) .
4 Inverse ETFs that Soared More Than 20% in February
February was the month of heightened volatility as rising concerns over faster-than-expected rates hike continued to shake the complacency off the stock market. This is especially true as the CBOE Volatility Index (VIX), also known as the fear gauge, traded in a wide range of high of more than 50 to a low of 12.50. The Dow Jones Industrial Average also saw wild swings of 1,600 and 1,200 in the first week of February — the two biggest intraday ranges in its history.
While the equity market suffered the worst decline in many years on some occasion during the month, commodities like gold and oil also continued to show their volatility. U.S. crude futures dropped from a three-year high of more than $66 per barrel to a low of under $60 per barrel during the month. For gold, while rising yields diminished the attractiveness of the yellow metal since it does not pay interest like fixed-income assets, a drive to hedge against inflation pushed investors to gold (read: Wall Street Sees Worst Sell-Off in Years: 5 ETF Buying Zones).
The fixed income space was also out of investors’ favor, piling up heavy losses with rising yields. The two-year yields climbed to the highest level in nearly 10 years at 2.274% and 10-year yields jumped to the highest level in more than four years to above 2.9%.
Given the downside sentiments and higher volatility, inverse or leveraged inverse ETFs gained immense popularity last month as investors embraced these products for big gains in a short span. In fact, many products provided outsized gains (over 20%) last month, though these involve a great deal of risk when compared to traditional products. These products either create an inverse long/short position or leveraged inverse long/short position in the underlying index through the use of swaps, options, future contracts and other financial instruments (read: Inverse Equity ETFs to Bet on Historic Selloff).
Below we have highlighted five such ETFs that generated handsome returns last month and should continue to do so at least for the near term if the sentiments remain volatile.
Direxion Daily Gold Miners Index Bear 3x Shares – Up 29.4%
Acting as a leveraged play on gold, gold miners tend to experience more losses than their bullion cousins in a declining metal market. DUST seeks to deliver three times (3x or 300%) the inverse daily performance of the NYSE Arca Gold Miners Index. The fund has amassed $280.1 million in its asset base and trades in heavy average volume of more than 5.9 million shares. It charges investors 95 bps in annual fees and expenses (read: Is Pain in Store for Gold Mining ETFs on Muted Earnings?).
Direxion Daily Natural Gas Related Bear 3X Shares – Up 28.4%
This product provides three times inverse exposure to the ISE-Revere Natural Gas Index. It has amassed $4.9 million in its asset base and trades in light volume of 21,000 shares a day on average. The ETF charges 95 bps in fees per year.
Direxion Daily Energy Bear 3x Shares ETF – Up 27.2%
This product provides three times inverse exposure to the Energy Select Sector Index. It is extremely popular and trades in solid volume 953,000 shares. The ETF charges annual fee of 95 bps and has AUM of $30.6 million (read: What Lies Ahead for Oil ETFs?).
Direxion Daily MSCI Real Estate Bear 3X Shares – Up 23.8%
This product seeks to deliver three times inverse performance of MSCI US REIT Index, charging investors’ 95 bps in expense ratio. It has AUM of $15.2 million and average daily volume of around 77,000 shares (read: Short These Sector ETFs on Rising Rate Concerns).
Direxion Daily S&P Oil & Gas Exp. & Prod. Bear 3X Shares – Up 20.7%
This fund seeks three times inverse exposure of the performance of the S&P Oil & Gas Exploration & Production Select Industry Index. DRIP has accumulated $33.2 million in its asset base and trades in a solid volume of around 1.2 million shares a day on average. The fund charges 95 bps in annual fees.
Bottom Line
While this strategy is highly beneficial for short-term traders, it could lead to huge losses compared to traditional funds in fluctuating or seesawing markets. Further, their performances could vary significantly from the actual performance of their underlying index over a longer period when compared to the shorter period (such as, weeks or months) due to their compounding effect (see: all the Inverse Equity ETFs here).
Still, for ETF investors who are bearish on equities for the near term, any of the above products could make an interesting choice. Clearly, a near-term short could be intriguing for those with high-risk tolerance, and a belief that the “trend is the friend” in this corner of the investing world.
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Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has nearly tripled the market from 1988 through 2015. Its average gain has been a stellar +26% per year.See these high-potential stocks free >>.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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The Zacks Analyst Blog Highlights: DUST, GASX, ERY, DRV and DRIP
For Immediate Release
Chicago, IL – March 2, 2018 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Direxion Daily Gold Miners Index Bear 3x Shares (DUST - Free Report) , Direxion Daily Natural Gas Related Bear 3X Shares , Direxion Daily Energy Bear 3x Shares ETF (ERY - Free Report) , Direxion Daily MSCI Real Estate Bear 3X Shares (DRV - Free Report) and Direxion Daily S&P Oil & Gas Exp. & Prod. Bear 3X Shares (DRIP - Free Report) .
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
Here are highlights from Thursday’s Analyst Blog:
4 Inverse ETFs that Soared More Than 20% in February
February was the month of heightened volatility as rising concerns over faster-than-expected rates hike continued to shake the complacency off the stock market. This is especially true as the CBOE Volatility Index (VIX), also known as the fear gauge, traded in a wide range of high of more than 50 to a low of 12.50. The Dow Jones Industrial Average also saw wild swings of 1,600 and 1,200 in the first week of February — the two biggest intraday ranges in its history.
While the equity market suffered the worst decline in many years on some occasion during the month, commodities like gold and oil also continued to show their volatility. U.S. crude futures dropped from a three-year high of more than $66 per barrel to a low of under $60 per barrel during the month. For gold, while rising yields diminished the attractiveness of the yellow metal since it does not pay interest like fixed-income assets, a drive to hedge against inflation pushed investors to gold (read: Wall Street Sees Worst Sell-Off in Years: 5 ETF Buying Zones).
The fixed income space was also out of investors’ favor, piling up heavy losses with rising yields. The two-year yields climbed to the highest level in nearly 10 years at 2.274% and 10-year yields jumped to the highest level in more than four years to above 2.9%.
Given the downside sentiments and higher volatility, inverse or leveraged inverse ETFs gained immense popularity last month as investors embraced these products for big gains in a short span. In fact, many products provided outsized gains (over 20%) last month, though these involve a great deal of risk when compared to traditional products. These products either create an inverse long/short position or leveraged inverse long/short position in the underlying index through the use of swaps, options, future contracts and other financial instruments (read: Inverse Equity ETFs to Bet on Historic Selloff).
Below we have highlighted five such ETFs that generated handsome returns last month and should continue to do so at least for the near term if the sentiments remain volatile.
Direxion Daily Gold Miners Index Bear 3x Shares – Up 29.4%
Acting as a leveraged play on gold, gold miners tend to experience more losses than their bullion cousins in a declining metal market. DUST seeks to deliver three times (3x or 300%) the inverse daily performance of the NYSE Arca Gold Miners Index. The fund has amassed $280.1 million in its asset base and trades in heavy average volume of more than 5.9 million shares. It charges investors 95 bps in annual fees and expenses (read: Is Pain in Store for Gold Mining ETFs on Muted Earnings?).
Direxion Daily Natural Gas Related Bear 3X Shares – Up 28.4%
This product provides three times inverse exposure to the ISE-Revere Natural Gas Index. It has amassed $4.9 million in its asset base and trades in light volume of 21,000 shares a day on average. The ETF charges 95 bps in fees per year.
Direxion Daily Energy Bear 3x Shares ETF – Up 27.2%
This product provides three times inverse exposure to the Energy Select Sector Index. It is extremely popular and trades in solid volume 953,000 shares. The ETF charges annual fee of 95 bps and has AUM of $30.6 million (read: What Lies Ahead for Oil ETFs?).
Direxion Daily MSCI Real Estate Bear 3X Shares – Up 23.8%
This product seeks to deliver three times inverse performance of MSCI US REIT Index, charging investors’ 95 bps in expense ratio. It has AUM of $15.2 million and average daily volume of around 77,000 shares (read: Short These Sector ETFs on Rising Rate Concerns).
Direxion Daily S&P Oil & Gas Exp. & Prod. Bear 3X Shares – Up 20.7%
This fund seeks three times inverse exposure of the performance of the S&P Oil & Gas Exploration & Production Select Industry Index. DRIP has accumulated $33.2 million in its asset base and trades in a solid volume of around 1.2 million shares a day on average. The fund charges 95 bps in annual fees.
Bottom Line
While this strategy is highly beneficial for short-term traders, it could lead to huge losses compared to traditional funds in fluctuating or seesawing markets. Further, their performances could vary significantly from the actual performance of their underlying index over a longer period when compared to the shorter period (such as, weeks or months) due to their compounding effect (see: all the Inverse Equity ETFs here).
Still, for ETF investors who are bearish on equities for the near term, any of the above products could make an interesting choice. Clearly, a near-term short could be intriguing for those with high-risk tolerance, and a belief that the “trend is the friend” in this corner of the investing world.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1 Stock of the Day pick for free.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has nearly tripled the market from 1988 through 2015. Its average gain has been a stellar +26% per year.See these high-potential stocks free >>.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.