We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
5 Leveraged/Inverse ETFs That Gained Double Digits in April
Read MoreHide Full Article
The month of April was marked by huge volatility. Though recession fears continued to weigh on investors’ sentiment, cooling inflation and better-than-expected earnings drove the stocks higher. The Dow Jones Industrial Average logged its best monthly gain since January, rising 1.7%, while the S&P 500 rose 1.5%. Though the tech-heavy Nasdaq Composite Index finished April marginally in the red, it posted its highest close of 2023.
This led to higher demand for leveraged and inverse-leveraged ETFs as these fetched outsized returns on the quick market turns in a short span. We highlight a bunch of the best-performing leveraged or inverse leveraged ETFs that have gained double digits in April.
These include Direxion Daily S&P Biotech Bull 3x Shares (LABU - Free Report) , Direxion Daily Semiconductor Bear 3x Shares (SOXS - Free Report) , Direxion Daily Homebuilders & Supplies Bull 3X Shares (NAIL - Free Report) , Daily Dow Jones Internet Bear 3X Shares (WEBS - Free Report) and Daily S&P 500 High Beta Bear 3X Shares (HIBS - Free Report) . The funds will remain investors’ darlings, provided the sentiments remain volatile.
The picture emerging from the Q1 earnings season continues to be one of resilience and stability, with companies not only beating estimates but also providing a good-enough outlook in an uncertain macro environment. Per the Earnings Trends report, the companies that have reported results so far are down 1.2% on 6.5% higher revenues, with 81.1% beating EPS estimates and 75% beating revenue estimates (read: 5 ETFs to Bet on From the Favorite Sectors for Q1 Earnings).
Majority of companies that have reported so far this season have beaten expectations, including tech and energy behemoths that account for a substantial allocation in the indexes.
On the other hand, the economy might be losing steam because of higher interest rates. This is especially true as consumer confidence declined for the third time in April in four months as anxiety over a slowing economy and possible recession weighed on American households. Retail sales fell more than expected in March as consumers cut back on purchases of motor vehicles and other big-ticket items. Growth in the U.S. economy slowed in the first quarter, with GDP rising only 1.1% annually. This followed GDP growth of 2.6% in the fourth quarter.
Consumer spending, which makes up about 70% of U.S. economic activity, remained strong despite the Fed having raised interest rates nine times straight since March 2022 in its effort to cool the economy and bring down the persistent, four-decade-high inflation. U.S. business activity also rose to an 11-month high in April, which was at odds with growing signs that the economy was in danger of slipping into recession as higher interest rates cool demand.
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, futures contracts or other financial instruments. Due to their compounding effect, investors can enjoy higher returns in a short period, provided the trend remains a friend (see: all the Inverse Equity ETFs here).
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 they appear.
Direxion Daily S&P Biotech Bull 3x Shares creates a three-times leveraged long position on the S&P Biotechnology Select Industry Index. It charges an annual fee of 0.95% and trades in a heavy average daily volume of about 40.4 million shares. Direxion Daily S&P Biotech Bull 3x Shares has AUM of $935.5 million.
Direxion Daily Semiconductor Bear 3x Shares targets the semiconductor corner of the technology sector with three times inverse leveraged exposure to the ICE Semiconductor Index. Direxion Daily Semiconductor Bear 3x Shares has amassed about $1.3 billion in its asset base while charging 89 bps in fees per year. Volume is good as it exchanges 66.7 million shares per day on average.
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. Direxion Daily Homebuilders & Supplies Bull 3X Shares charges an annual fee of 93 bps and trades in a good average daily volume of about 238,000 shares. The fund has accumulated $190.6 million in its asset base (read: Could Housing ETFs Spring Up in the Key Selling Season?).
Daily Dow Jones Internet Bear 3X Shares (WEBS - Free Report) – Up 12.8%
Daily Dow Jones Internet Bear 3X Shares provides a three-times inverse play on the Internet corner of the broad technology sector by tracking the Dow Jones Internet Composite Index. Daily Dow Jones Internet Bear 3X Shares has attracted $43.6 million in its asset base and charges 95 bps in annual fees. The ETF sees an average daily volume of about 412,000 shares.
Daily S&P 500 High Beta Bear 3X Shares (HIBS - Free Report) – Up 12.2%
Daily S&P 500 High Beta Bear 3X Shares offers three times inverse exposure to the performance of the S&P 500 High Beta Index. It has gathered $67.8 million in AUM and trades in an average daily volume of 3 million shares. Daily S&P 500 High Beta Bear 3X Shares charges 95 bps in fees per year from investors.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
5 Leveraged/Inverse ETFs That Gained Double Digits in April
The month of April was marked by huge volatility. Though recession fears continued to weigh on investors’ sentiment, cooling inflation and better-than-expected earnings drove the stocks higher. The Dow Jones Industrial Average logged its best monthly gain since January, rising 1.7%, while the S&P 500 rose 1.5%. Though the tech-heavy Nasdaq Composite Index finished April marginally in the red, it posted its highest close of 2023.
This led to higher demand for leveraged and inverse-leveraged ETFs as these fetched outsized returns on the quick market turns in a short span. We highlight a bunch of the best-performing leveraged or inverse leveraged ETFs that have gained double digits in April.
These include Direxion Daily S&P Biotech Bull 3x Shares (LABU - Free Report) , Direxion Daily Semiconductor Bear 3x Shares (SOXS - Free Report) , Direxion Daily Homebuilders & Supplies Bull 3X Shares (NAIL - Free Report) , Daily Dow Jones Internet Bear 3X Shares (WEBS - Free Report) and Daily S&P 500 High Beta Bear 3X Shares (HIBS - Free Report) . The funds will remain investors’ darlings, provided the sentiments remain volatile.
The picture emerging from the Q1 earnings season continues to be one of resilience and stability, with companies not only beating estimates but also providing a good-enough outlook in an uncertain macro environment. Per the Earnings Trends report, the companies that have reported results so far are down 1.2% on 6.5% higher revenues, with 81.1% beating EPS estimates and 75% beating revenue estimates (read: 5 ETFs to Bet on From the Favorite Sectors for Q1 Earnings).
Majority of companies that have reported so far this season have beaten expectations, including tech and energy behemoths that account for a substantial allocation in the indexes.
On the other hand, the economy might be losing steam because of higher interest rates. This is especially true as consumer confidence declined for the third time in April in four months as anxiety over a slowing economy and possible recession weighed on American households. Retail sales fell more than expected in March as consumers cut back on purchases of motor vehicles and other big-ticket items. Growth in the U.S. economy slowed in the first quarter, with GDP rising only 1.1% annually. This followed GDP growth of 2.6% in the fourth quarter.
Consumer spending, which makes up about 70% of U.S. economic activity, remained strong despite the Fed having raised interest rates nine times straight since March 2022 in its effort to cool the economy and bring down the persistent, four-decade-high inflation. U.S. business activity also rose to an 11-month high in April, which was at odds with growing signs that the economy was in danger of slipping into recession as higher interest rates cool demand.
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, futures contracts or other financial instruments. Due to their compounding effect, investors can enjoy higher returns in a short period, provided the trend remains a friend (see: all the Inverse Equity ETFs here).
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 they appear.
Direxion Daily S&P Biotech Bull 3x Shares (LABU - Free Report) – Up 22%
Direxion Daily S&P Biotech Bull 3x Shares creates a three-times leveraged long position on the S&P Biotechnology Select Industry Index. It charges an annual fee of 0.95% and trades in a heavy average daily volume of about 40.4 million shares. Direxion Daily S&P Biotech Bull 3x Shares has AUM of $935.5 million.
Direxion Daily Semiconductor Bear 3x Shares (SOXS - Free Report) – Up 21.9%
Direxion Daily Semiconductor Bear 3x Shares targets the semiconductor corner of the technology sector with three times inverse leveraged exposure to the ICE Semiconductor Index. Direxion Daily Semiconductor Bear 3x Shares has amassed about $1.3 billion in its asset base while charging 89 bps in fees per year. Volume is good as it exchanges 66.7 million shares per day on average.
Direxion Daily Homebuilders & Supplies Bull 3X Shares (NAIL - Free Report) - Up 20%
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. Direxion Daily Homebuilders & Supplies Bull 3X Shares charges an annual fee of 93 bps and trades in a good average daily volume of about 238,000 shares. The fund has accumulated $190.6 million in its asset base (read: Could Housing ETFs Spring Up in the Key Selling Season?).
Daily Dow Jones Internet Bear 3X Shares (WEBS - Free Report) – Up 12.8%
Daily Dow Jones Internet Bear 3X Shares provides a three-times inverse play on the Internet corner of the broad technology sector by tracking the Dow Jones Internet Composite Index. Daily Dow Jones Internet Bear 3X Shares has attracted $43.6 million in its asset base and charges 95 bps in annual fees. The ETF sees an average daily volume of about 412,000 shares.
Daily S&P 500 High Beta Bear 3X Shares (HIBS - Free Report) – Up 12.2%
Daily S&P 500 High Beta Bear 3X Shares offers three times inverse exposure to the performance of the S&P 500 High Beta Index. It has gathered $67.8 million in AUM and trades in an average daily volume of 3 million shares. Daily S&P 500 High Beta Bear 3X Shares charges 95 bps in fees per year from investors.