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The Zacks Analyst Blog Highlights: NRGU, RETL, DPST, HIBL and NAIL
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For Immediate Release
Chicago, IL – April 6, 2021 – 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: MicroSectors U.S. Big Oil Index 3X Leveraged ETN (NRGU - Free Report) , Direxion Daily Retail Bull 3X Shares (RETL - Free Report) , Direxion Daily Regional Banks Bull 3X Shares (DPST - Free Report) , Daily S&P 500 High Beta Bull 3X Shares (HIBL - Free Report) and Direxion Daily Homebuilders & Supplies Bull 3X Shares (NAIL - Free Report) .
Here are highlights from Monday’s Analyst Blog:
5 Best-Leveraged ETFs of the First Quarter 2021
Amid bouts of volatility triggered by the tech sell-off and tax hike worries, Wall Street ended the first quarter on a high note with the Dow Jones and the S&P 500 logging the fourth consecutive quarter of positive gains.
The combination of rapid COVID-19 vaccinations, progress on vaccines, and an unprecedented stimulus have been the major catalysts. President Joe Biden last week unveiled an additional $2 trillion spending plan over 10 years largely toward improving transportation, communication and power infrastructure. The infrastructure plan will be paired with an additional $1 trillion in spending focused on social programs and is expected to be unveiled in April.
Additionally, bouts of upbeat data underscore confidence in the economy, bolstering the risk appetite. The U.S. economy added 916,000 jobs in March — the best gain since August and the unemployment rate fell to a pandemic low of 6%.
Americans are growing optimistic about an economic recovery. This is especially true as the University of Michigan's final sentiment index climbed to a pandemic high of 84.9 in late March from a preliminary reading of 83. The Conference Board on consumer confidence index also jumped to 109.7 in March — the highest level since the onset of the pandemic in March 2020 (read: 5 ETFs to Ride on Rising Consumer Confidence).
The accelerating economic growth has resulted in huge demand for leveraged ETFs as investors seek to register big gains in a short span. Leveraged funds provide multiple exposure (2X or 3X) to the daily performance of the underlying index by employing various investment strategies such as swaps, futures contracts and other derivative instruments. Due to their compounding effect, investors can enjoy higher returns in a very short period of time, provided the trend remains positive.
Below we highlight the five best-performing leveraged equity ETFs from the different corners of the market that piled up more than 75% gains last quarter. These funds will continue to be investors' darlings, provided the sentiments remain bullish.
MicroSectors U.S. Big Oil Index 3X Leveraged ETN – Up 140%
This ETN provides three times leveraged exposure to the Solactive MicroSectors U.S. Big Oil Index, which is equal-dollar weighted and provides exposure to the 10 largest U.S. energy and oil companies. It has been able to manage $481.7 million in its asset base while trading in an average daily volume of 360,000 shares. Expense ratio comes in at 0.95% (read: 4 Leveraged ETFs to Tap the Soaring Energy Sector).
Direxion Daily Retail Bull 3X Shares – Up 116.7%
This ETF offers three times leveraged exposure to the S&P Retail Select Industry Index. The product has amassed about $101.7 million in its asset base, while charging 95 bps in fees per year. It exchanges around 113,000 shares a day on average.
Direxion Daily Regional Banks Bull 3x Shares – Up 97.2%
This fund seeks to deliver three times the returns of the S&P Regional Banks Select Industry Index, charging 95 bps in fees per year. It has accumulated $459.5 million in its asset base and trades in an average daily volume of around 307,000 shares (read: Bank ETFs Tumble on Archegos Downfall: What's in Store?).
Daily S&P 500 High Beta Bull 3X Shares – Up 82.9%
This ETF offers three times exposure to the performance of the S&P 500 High Beta Index. It has gathered $102.4 million in its asset base and trades in an average daily volume of 201,000 shares. The fund charges 95 bps in fees per year from its investors.
NAIL provides leveraged exposure to homebuilders and creates a three times long position in the Dow Jones U.S. Select Home Construction Index. It charges an annual fee of 95 bps and trades in a good average daily volume of about 608,000 shares. The fund has accumulated $380.8 million in its asset base (read: Can Housing ETFs Remain Red-Hot in 2021?).
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, the funds' performance 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 Leveraged Equity ETFs here).
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 >>
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: NRGU, RETL, DPST, HIBL and NAIL
For Immediate Release
Chicago, IL – April 6, 2021 – 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: MicroSectors U.S. Big Oil Index 3X Leveraged ETN (NRGU - Free Report) , Direxion Daily Retail Bull 3X Shares (RETL - Free Report) , Direxion Daily Regional Banks Bull 3X Shares (DPST - Free Report) , Daily S&P 500 High Beta Bull 3X Shares (HIBL - Free Report) and Direxion Daily Homebuilders & Supplies Bull 3X Shares (NAIL - Free Report) .
Here are highlights from Monday’s Analyst Blog:
5 Best-Leveraged ETFs of the First Quarter 2021
Amid bouts of volatility triggered by the tech sell-off and tax hike worries, Wall Street ended the first quarter on a high note with the Dow Jones and the S&P 500 logging the fourth consecutive quarter of positive gains.
The combination of rapid COVID-19 vaccinations, progress on vaccines, and an unprecedented stimulus have been the major catalysts. President Joe Biden last week unveiled an additional $2 trillion spending plan over 10 years largely toward improving transportation, communication and power infrastructure. The infrastructure plan will be paired with an additional $1 trillion in spending focused on social programs and is expected to be unveiled in April.
Additionally, bouts of upbeat data underscore confidence in the economy, bolstering the risk appetite. The U.S. economy added 916,000 jobs in March — the best gain since August and the unemployment rate fell to a pandemic low of 6%.
Americans are growing optimistic about an economic recovery. This is especially true as the University of Michigan's final sentiment index climbed to a pandemic high of 84.9 in late March from a preliminary reading of 83. The Conference Board on consumer confidence index also jumped to 109.7 in March — the highest level since the onset of the pandemic in March 2020 (read: 5 ETFs to Ride on Rising Consumer Confidence).
The accelerating economic growth has resulted in huge demand for leveraged ETFs as investors seek to register big gains in a short span. Leveraged funds provide multiple exposure (2X or 3X) to the daily performance of the underlying index by employing various investment strategies such as swaps, futures contracts and other derivative instruments. Due to their compounding effect, investors can enjoy higher returns in a very short period of time, provided the trend remains positive.
Below we highlight the five best-performing leveraged equity ETFs from the different corners of the market that piled up more than 75% gains last quarter. These funds will continue to be investors' darlings, provided the sentiments remain bullish.
MicroSectors U.S. Big Oil Index 3X Leveraged ETN – Up 140%
This ETN provides three times leveraged exposure to the Solactive MicroSectors U.S. Big Oil Index, which is equal-dollar weighted and provides exposure to the 10 largest U.S. energy and oil companies. It has been able to manage $481.7 million in its asset base while trading in an average daily volume of 360,000 shares. Expense ratio comes in at 0.95% (read: 4 Leveraged ETFs to Tap the Soaring Energy Sector).
Direxion Daily Retail Bull 3X Shares – Up 116.7%
This ETF offers three times leveraged exposure to the S&P Retail Select Industry Index. The product has amassed about $101.7 million in its asset base, while charging 95 bps in fees per year. It exchanges around 113,000 shares a day on average.
Direxion Daily Regional Banks Bull 3x Shares – Up 97.2%
This fund seeks to deliver three times the returns of the S&P Regional Banks Select Industry Index, charging 95 bps in fees per year. It has accumulated $459.5 million in its asset base and trades in an average daily volume of around 307,000 shares (read: Bank ETFs Tumble on Archegos Downfall: What's in Store?).
Daily S&P 500 High Beta Bull 3X Shares – Up 82.9%
This ETF offers three times exposure to the performance of the S&P 500 High Beta Index. It has gathered $102.4 million in its asset base and trades in an average daily volume of 201,000 shares. The fund charges 95 bps in fees per year from its investors.
Direxion Daily Homebuilders & Supplies Bull 3X Shares - Up 77.9%
NAIL provides leveraged exposure to homebuilders and creates a three times long position in the Dow Jones U.S. Select Home Construction Index. It charges an annual fee of 95 bps and trades in a good average daily volume of about 608,000 shares. The fund has accumulated $380.8 million in its asset base (read: Can Housing ETFs Remain Red-Hot in 2021?).
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, the funds' performance 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 Leveraged Equity ETFs here).
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 >>
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Zacks Investment Research
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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.