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5 Leveraged/Inverse ETFs Up More Than 15% in November
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The month of November proved to be volatile for the U.S. stock market given rising inflation, a surge in COVID-19 cases and Fed’s taper talks. In fact, all the three major indices ended the month in red with the Dow Jones plunging the most by 3.7%.
However, strong corporate earnings, rising consumer confidence, new COVID-19 vaccines and boosters continued to act as catalysts for the stock market. Amid the volatility, leveraged and inverse-leveraged ETFs gained increased popularity as these fetched outsized returns on quick market turns in a short span.
Direxion Daily Semiconductor Bull 3x Shares (SOXL - Free Report) , Direxion Daily Cloud Computing Bear 2X Shares , MicroSectors U.S. Big Banks Index -3X Inverse Leveraged ETN (BNKD - Free Report) , Direxion Daily S&P Biotech Bear 3x Shares (LABD - Free Report) and MicroSectors U.S. Big Oil Index -3X Inverse Leveraged ETN (NRGD - Free Report) gained more than 15% last month and might continue their strong performance if sentiments remain the same.
The new Covid variant, first detected in South Africa, is now spreading all over the world, causing travel restrictions as well as the potential lockdown measures. This has once again raised worries of the slowdown in global economic recovery. Additionally, Federal Reserve Chair Jerome Powell is planning to speed up the tapering of bond-buying at its December meeting to combat increasing price pressures (read: ETF Areas to Gain/Lose on Fear of Omicron Strain of Coronavirus).
Leveraged and Inverse-Leveraged ETFs
Leveraged and inverse-leveraged ETFs either create a leveraged long/short position, an inverse long/short position or a leveraged inverse long/short position in the underlying index through the use of swaps, options, future contracts and other financial instruments. Due to their compounding effect, investors can enjoy higher returns in a very short period of time provided the trend remains a friend.
However, these funds run the risk of huge losses compared to traditional funds in fluctuating or seesawing markets. Further, their performance could vary significantly from the actual performance of their underlying index over a longer period when compared to a shorter period (such as, weeks or months).
Investors should note that these products are suitable only for short-term traders as these are rebalanced on a daily basis. Further, liquidity can be a big problem as it can make the products more expensive than what they appear (see: all the Inverse Equity ETFs here).
Still, ETF investors seeking to tap abrupt movements can go long or short in the near term.
Direxion Daily Semiconductor Bull 3x Shares targets the semiconductor corner of the technology sector with three times leveraged exposure to the ICE Semiconductor Index. Direxion Daily Semiconductor Bull 3x Shares has amassed about $4.7 billion in its asset base while charging 94 bps in fees per year.
Volume is good as it exchanges 13.6 million shares per day on average. Direxion Daily Semiconductor Bull 3x Shares soared 35.7% last month.
Direxion Daily Cloud Computing Bear 2X Shares
Direxion Daily Cloud Computing Bear 2X Shares targets the cloud-computing segment of the broad technology sector, offering two times inverse exposure to the performance of the Indxx USA Cloud Computing Index.
With AUM of $14.6 million, Direxion Daily Cloud Computing Bear 2X Shares has expense ratio of 0.95% and trades in an average daily volume of 1,000 shares. The product rose 20.6% in November.
MicroSectors U.S. Big Banks Index -3X Inverse Leveraged ETN (BNKD - Free Report)
MicroSectors U.S. Big Banks Index -3X Inverse Leveraged ETN seeks to offer three times inverse leveraged exposure to the Solactive MicroSectors U.S. Big Banks Index. The benchmark includes 10 U.S. stocks in the banking sector with the largest free-float market capitalization in equal weights (read: 5 Inverse ETFs Up Over 10% on Black Friday).
MicroSectors U.S. Big Banks Index -3X Inverse Leveraged ETN has accumulated $4.6 million in its asset base. It charges 95 bps in annual fees and trades in an average daily volume of about 56,000 shares. MicroSectors U.S. Big Banks Index -3X Inverse Leveraged ETN was up 20.6% last month.
Direxion Daily S&P Biotech Bear 3x Shares seeks to deliver three times the inverse daily performance of the S&P Biotechnology Select Industry Index, which includes domestic companies from the biotechnology industry.
Direxion Daily S&P Biotech Bear 3x Shares has amassed $46 million in its asset base and has an average daily volume of around 2 million shares. LABD charges investors 95 bps in annual fees and gained 19% last month (read: Moderna ETFs Rallying on COVID-19 Vaccine News to Combat Omicron).
MicroSectors U.S. Big Oil Index -3X Inverse Leveraged ETN (NRGD - Free Report)
MicroSectors U.S. Big Oil Index -3X Inverse Leveraged ETN offers three times inverse 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.
MicroSectors U.S. Big Oil Index -3X Inverse Leveraged ETN has accumulated $41.8 million in its asset base. It charges 95 bps in annual fees and trades in an average daily volume of about 1.3 million shares. MicroSectors U.S. Big Oil Index -3X Inverse Leveraged ETN gained 17.1% in November.
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5 Leveraged/Inverse ETFs Up More Than 15% in November
The month of November proved to be volatile for the U.S. stock market given rising inflation, a surge in COVID-19 cases and Fed’s taper talks. In fact, all the three major indices ended the month in red with the Dow Jones plunging the most by 3.7%.
However, strong corporate earnings, rising consumer confidence, new COVID-19 vaccines and boosters continued to act as catalysts for the stock market. Amid the volatility, leveraged and inverse-leveraged ETFs gained increased popularity as these fetched outsized returns on quick market turns in a short span.
Direxion Daily Semiconductor Bull 3x Shares (SOXL - Free Report) , Direxion Daily Cloud Computing Bear 2X Shares , MicroSectors U.S. Big Banks Index -3X Inverse Leveraged ETN (BNKD - Free Report) , Direxion Daily S&P Biotech Bear 3x Shares (LABD - Free Report) and MicroSectors U.S. Big Oil Index -3X Inverse Leveraged ETN (NRGD - Free Report) gained more than 15% last month and might continue their strong performance if sentiments remain the same.
The new Covid variant, first detected in South Africa, is now spreading all over the world, causing travel restrictions as well as the potential lockdown measures. This has once again raised worries of the slowdown in global economic recovery. Additionally, Federal Reserve Chair Jerome Powell is planning to speed up the tapering of bond-buying at its December meeting to combat increasing price pressures (read: ETF Areas to Gain/Lose on Fear of Omicron Strain of Coronavirus).
Leveraged and Inverse-Leveraged ETFs
Leveraged and inverse-leveraged ETFs either create a leveraged long/short position, an inverse long/short position or a leveraged inverse long/short position in the underlying index through the use of swaps, options, future contracts and other financial instruments. Due to their compounding effect, investors can enjoy higher returns in a very short period of time provided the trend remains a friend.
However, these funds run the risk of huge losses compared to traditional funds in fluctuating or seesawing markets. Further, their performance could vary significantly from the actual performance of their underlying index over a longer period when compared to a shorter period (such as, weeks or months).
Investors should note that these products are suitable only for short-term traders as these are rebalanced on a daily basis. Further, liquidity can be a big problem as it can make the products more expensive than what they appear (see: all the Inverse Equity ETFs here).
Still, ETF investors seeking to tap abrupt movements can go long or short in the near term.
ETFs That Gained Most
Direxion Daily Semiconductor Bull 3x Shares (SOXL - Free Report)
Direxion Daily Semiconductor Bull 3x Shares targets the semiconductor corner of the technology sector with three times leveraged exposure to the ICE Semiconductor Index. Direxion Daily Semiconductor Bull 3x Shares has amassed about $4.7 billion in its asset base while charging 94 bps in fees per year.
Volume is good as it exchanges 13.6 million shares per day on average. Direxion Daily Semiconductor Bull 3x Shares soared 35.7% last month.
Direxion Daily Cloud Computing Bear 2X Shares
Direxion Daily Cloud Computing Bear 2X Shares targets the cloud-computing segment of the broad technology sector, offering two times inverse exposure to the performance of the Indxx USA Cloud Computing Index.
With AUM of $14.6 million, Direxion Daily Cloud Computing Bear 2X Shares has expense ratio of 0.95% and trades in an average daily volume of 1,000 shares. The product rose 20.6% in November.
MicroSectors U.S. Big Banks Index -3X Inverse Leveraged ETN (BNKD - Free Report)
MicroSectors U.S. Big Banks Index -3X Inverse Leveraged ETN seeks to offer three times inverse leveraged exposure to the Solactive MicroSectors U.S. Big Banks Index. The benchmark includes 10 U.S. stocks in the banking sector with the largest free-float market capitalization in equal weights (read: 5 Inverse ETFs Up Over 10% on Black Friday).
MicroSectors U.S. Big Banks Index -3X Inverse Leveraged ETN has accumulated $4.6 million in its asset base. It charges 95 bps in annual fees and trades in an average daily volume of about 56,000 shares. MicroSectors U.S. Big Banks Index -3X Inverse Leveraged ETN was up 20.6% last month.
Direxion Daily S&P Biotech Bear 3x Shares (LABD - Free Report)
Direxion Daily S&P Biotech Bear 3x Shares seeks to deliver three times the inverse daily performance of the S&P Biotechnology Select Industry Index, which includes domestic companies from the biotechnology industry.
Direxion Daily S&P Biotech Bear 3x Shares has amassed $46 million in its asset base and has an average daily volume of around 2 million shares. LABD charges investors 95 bps in annual fees and gained 19% last month (read: Moderna ETFs Rallying on COVID-19 Vaccine News to Combat Omicron).
MicroSectors U.S. Big Oil Index -3X Inverse Leveraged ETN (NRGD - Free Report)
MicroSectors U.S. Big Oil Index -3X Inverse Leveraged ETN offers three times inverse 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.
MicroSectors U.S. Big Oil Index -3X Inverse Leveraged ETN has accumulated $41.8 million in its asset base. It charges 95 bps in annual fees and trades in an average daily volume of about 1.3 million shares. MicroSectors U.S. Big Oil Index -3X Inverse Leveraged ETN gained 17.1% in November.