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After a strong comeback in the early weeks of the year, Wall Street was caught in feeble trading triggered by the Fed’s aggressive rate hike speculation in February and the bank crisis in March. However, improving economic data as well as recovering bank stocks of late have provided some support to the stocks.
With just a day left to end the first quarter, the tech-heavy Nasdaq Index is the outperformer with 14.8% gains led by the surge in technology stocks. The S&P 500 is up 5.5%, while the Dow is down 0.9% due to heavy weighting to the bank stocks. This has resulted in huge demand for leveraged ETFs as investors sought to register big gains in a short span.
We highlight a bunch of the best-performing leveraged equity ETFs from different corners of the market that are leaders in their respective segments. These include BMO REX MicroSectors FANG+ Index 3X Leveraged ETN (FNGU - Free Report) , ProShares UltraPro QQQ (TQQQ - Free Report) . MicroSectors Travel 3x Leveraged ETN (FLYU - Free Report) , Direxion Daily Consumer Discretionary Bull 3X Shares (WANT - Free Report) and Direxion Daily Homebuilders & Supplies Bull 3X Shares (NAIL - Free Report) . These funds will continue to be investors’ darlings, at least in the near term, provided the sentiments remain bullish.
The outperformance of the Nasdaq index was the result of fears over the financial instability caused by the failure of a series of banks. The scare has compelled investors to adopt an old strategy and flock toward mega caps’ cash-rich balance sheets and durable revenue streams (read: Big Tech ETFs Roar: Will the Rally Continue?).
Though inflation is at elevated levels, it is cooling down slowly and has been on a downtrend for eight consecutive months. Job gains picked up and were running at a robust pace while the unemployment rate has remained low. The recent economic indicators also pointed to modest growth in spending and production. U.S. consumer confidence unexpectedly increased in March after two straight months of decline, even as persistent inflation, bank collapses and anxiety over a possible recession weighed on American households.
Meanwhile, the Fed raised interest rates by 25 bps this month, taking the fed funds rate to 4.75-5%, the highest since October 2007. It signaled that an end to interest rate increases could be on the horizon, and some additional policy firming may be appropriate in order to attain a monetary policy that is sufficiently restrictive to return inflation to 2% over time.
We have profiled the ETFs in detail below:
BMO REX MicroSectors FANG+ Index 3X Leveraged ETN (FNGU - Free Report) – Up 121.1%
BMO REX MicroSectors FANG+ Index 3X Leveraged ETN seeks to offer three times leveraged exposure to the NYSE FANG Index, charging 95 bps in annual fees.
BMO REX MicroSectors FANG+ Index 3X Leveraged ETN has accumulated $1.2 billion in its asset base and trades in an average daily volume of 2.3 million shares.
MicroSectors Travel 3x Leveraged ETN offers three times exposure to the performance of the MerQube MicroSectors U.S. Travel Index. It has accumulated $4.3 million in its asset base since its debut in late June and charges 95 bps in annual fees.
MicroSectors Travel 3x Leveraged ETN trades in a paltry volume of 3,000 shares per day on average.
Direxion Daily Consumer Discretionary Bull 3X Shares offers leveraged exposure play in the consumer discretionary sector. It provides three times exposure to the Consumer Discretionary Select Sector Index, charging 95 bps in annual fees.
Direxion Daily Consumer Discretionary Bull 3X Shares has AUM of $24.1 million and an average daily volume of 67,000 shares.
Direxion Daily Homebuilders & Supplies Bull 3X Shares provides leveraged exposure to homebuilders. It creates a three times long position in the Dow Jones U.S. Select Home Construction Index (read: Could Housing ETFs Spring Up in the Key Selling Season?).
Direxion Daily Homebuilders & Supplies Bull 3X Shares charges an annual fee of 94 bps and trades in a good average daily volume of about 67,000 shares. The fund has accumulated $154.1 million in its asset base.
Bottom Line
As a caveat, investors should note that these products are extremely volatile and suitable only for short-term traders. Additionally, the daily rebalancing — when combined with leverage — may make these products deviate significantly from the expected long-term performance figures (see: all the Leveraged Equity ETFs here).
Still, for ETF investors bullish on U.S. stocks for the near term, either of the above products can be an interesting choice. Clearly, a near-term long could be intriguing for those with high-risk tolerance and a belief that the trend is a friend in this corner of the investing world.
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5 Top-Performing Leveraged ETFs of Q1
After a strong comeback in the early weeks of the year, Wall Street was caught in feeble trading triggered by the Fed’s aggressive rate hike speculation in February and the bank crisis in March. However, improving economic data as well as recovering bank stocks of late have provided some support to the stocks.
With just a day left to end the first quarter, the tech-heavy Nasdaq Index is the outperformer with 14.8% gains led by the surge in technology stocks. The S&P 500 is up 5.5%, while the Dow is down 0.9% due to heavy weighting to the bank stocks. This has resulted in huge demand for leveraged ETFs as investors sought to register big gains in a short span.
We highlight a bunch of the best-performing leveraged equity ETFs from different corners of the market that are leaders in their respective segments. These include BMO REX MicroSectors FANG+ Index 3X Leveraged ETN (FNGU - Free Report) , ProShares UltraPro QQQ (TQQQ - Free Report) . MicroSectors Travel 3x Leveraged ETN (FLYU - Free Report) , Direxion Daily Consumer Discretionary Bull 3X Shares (WANT - Free Report) and Direxion Daily Homebuilders & Supplies Bull 3X Shares (NAIL - Free Report) . These funds will continue to be investors’ darlings, at least in the near term, provided the sentiments remain bullish.
The outperformance of the Nasdaq index was the result of fears over the financial instability caused by the failure of a series of banks. The scare has compelled investors to adopt an old strategy and flock toward mega caps’ cash-rich balance sheets and durable revenue streams (read: Big Tech ETFs Roar: Will the Rally Continue?).
Though inflation is at elevated levels, it is cooling down slowly and has been on a downtrend for eight consecutive months. Job gains picked up and were running at a robust pace while the unemployment rate has remained low. The recent economic indicators also pointed to modest growth in spending and production. U.S. consumer confidence unexpectedly increased in March after two straight months of decline, even as persistent inflation, bank collapses and anxiety over a possible recession weighed on American households.
Meanwhile, the Fed raised interest rates by 25 bps this month, taking the fed funds rate to 4.75-5%, the highest since October 2007. It signaled that an end to interest rate increases could be on the horizon, and some additional policy firming may be appropriate in order to attain a monetary policy that is sufficiently restrictive to return inflation to 2% over time.
We have profiled the ETFs in detail below:
BMO REX MicroSectors FANG+ Index 3X Leveraged ETN (FNGU - Free Report) – Up 121.1%
BMO REX MicroSectors FANG+ Index 3X Leveraged ETN seeks to offer three times leveraged exposure to the NYSE FANG Index, charging 95 bps in annual fees.
BMO REX MicroSectors FANG+ Index 3X Leveraged ETN has accumulated $1.2 billion in its asset base and trades in an average daily volume of 2.3 million shares.
ProShares UltraPro QQQ (TQQQ - Free Report) – Up 56.6%
ProShares UltraPro QQQ offers three times the leveraged exposure to the NASDAQ-100 Index (read: Nasdaq-100 Enters Bull Market: ETFs to Ride on).
ProShares UltraPro QQQ amassed $13 billion in AUM and trades in a heavy volume of 177.6 million shares, on average. It charges 95 bps in annual fees.
MicroSectors Travel 3x Leveraged ETN (FLYU - Free Report) – Up 45.7%
MicroSectors Travel 3x Leveraged ETN offers three times exposure to the performance of the MerQube MicroSectors U.S. Travel Index. It has accumulated $4.3 million in its asset base since its debut in late June and charges 95 bps in annual fees.
MicroSectors Travel 3x Leveraged ETN trades in a paltry volume of 3,000 shares per day on average.
Direxion Daily Consumer Discretionary Bull 3X Shares (WANT - Free Report) – Up 35.1%
Direxion Daily Consumer Discretionary Bull 3X Shares offers leveraged exposure play in the consumer discretionary sector. It provides three times exposure to the Consumer Discretionary Select Sector Index, charging 95 bps in annual fees.
Direxion Daily Consumer Discretionary Bull 3X Shares has AUM of $24.1 million and an average daily volume of 67,000 shares.
Direxion Daily Homebuilders & Supplies Bull 3X Shares (NAIL - Free Report) - Up 35%
Direxion Daily Homebuilders & Supplies Bull 3X Shares provides leveraged exposure to homebuilders. It creates a three times long position in the Dow Jones U.S. Select Home Construction Index (read: Could Housing ETFs Spring Up in the Key Selling Season?).
Direxion Daily Homebuilders & Supplies Bull 3X Shares charges an annual fee of 94 bps and trades in a good average daily volume of about 67,000 shares. The fund has accumulated $154.1 million in its asset base.
Bottom Line
As a caveat, investors should note that these products are extremely volatile and suitable only for short-term traders. Additionally, the daily rebalancing — when combined with leverage — may make these products deviate significantly from the expected long-term performance figures (see: all the Leveraged Equity ETFs here).
Still, for ETF investors bullish on U.S. stocks for the near term, either of the above products can be an interesting choice. Clearly, a near-term long could be intriguing for those with high-risk tolerance and a belief that the trend is a friend in this corner of the investing world.