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The U.S. stock market experienced a promising start to June but encountered volatility in the latter half. This volatility was triggered by a hawkish signal from the Federal Reserve, which intensified inversions in the yield curve. As a result of the Fed's indication of future interest-rate hikes, certain sections of the U.S. bond yield curve experienced more pronounced inversions, indicating investor concerns about an impending recession.
Despite this, all three major indices managed to be in the green, with the S&P 500 and the Nasdaq Composite Index gaining about 4%, and the Dow Jones Industrial Average advancing 3.2%. 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 gained more than 25% in June.
These include Direxion Daily TSLA Bull 1.5X Shares (TSLL - Free Report) , Direxion Daily Homebuilders & Supplies Bull 3X Shares (NAIL - Free Report) , MicroSectors Travel 3x Leveraged ETN (FLYU - Free Report) , Direxion Daily Consumer Discretionary Bull 3X Shares (WANT - Free Report) and Direxion Daily Electric and Autonomous Vehicles Bull 2X Shares (EVAV - Free Report) . These funds will continue to be investors’ darlings, at least in the near term, provided the sentiments remain bullish.
The Fed kept interest rates steady in the latest meeting at a range of 5% to 5.25%. This pause came after 10 consecutive rate hikes. Economic activity continued to expand at a modest pace, with job gains being robust, the unemployment rate remaining low, and inflation moderating (read: 5 ETF Zones Primed for 2023 Growth Amid Rate Hike Prospects).
The economy added 339,000 jobs in May, up from April’s revised job gains number of 294,000, and hotter than 190,000 jobs that economists were expecting. Meanwhile, inflation cooled down for the eleventh consecutive month in May. The Consumer Price Index revealed that headline inflation rose 0.1% over the last month and 4% year over year in May, representing a slowdown from April's 0.4% month-over-month increase and a 4.9% annual gain. This marks the smallest yearly advance since March 2021.
Retail sales again rose modestly in May, showcasing resilient consumer demand in the face of mounting economic challenges. Meanwhile, consumer confidence unexpectedly jumped to an 18-month high in June amid lingering fears of a recession. The U.S. housing sector has also shown immense improvement, with homebuilder confidence reaching its highest level in almost a year.
With AUM of $689 million, Direxion Daily TSLA Bull 1.5X Shares is just an 11-month-old ETF and is by far the largest U.S.-listed single-stock ETF on the market today. TSLL offers 1.5 times (150%) the daily percentage change of the common stock of Tesla, charging 95 bps in annual fees. It trades in an average daily volume of 13 million shares (read: Single-Stock Tesla ETF Racing to Hit Billion-Dollar AUM).
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, charging an annual fee of 93 bps. Direxion Daily Homebuilders & Supplies Bull 3X Shares trades in a good average daily volume of about 213,000 shares and has accumulated $232.4 million in its asset base.
MicroSectors Travel 3x Leveraged ETN offers three times exposure to the performance of the MerQube MicroSectors U.S. Travel Index. It has accumulated $6 million in its asset base since its debut in late June last year and charges 95 bps in annual fees. MicroSectors Travel 3x Leveraged ETN trades in a paltry volume of 4,000 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 $34.9 million and an average daily volume of 66,000 shares.
Direxion Daily Electric and Autonomous Vehicles Bull 2X Shares (EVAV - Free Report) - Up 26.9%
Direxion Daily Electric and Autonomous Vehicles Bull 2X Shares seeks to track two times the performance of the Indxx US Electric and Autonomous Vehicles Index. It has accumulated $6 million in its asset base. Direxion Daily Electric and Autonomous Vehicles Bull 2X Shares charges 95 bps in annual fees and trades in an average daily volume of 6,000 shares (read: Top EV ETFs for Electrifying Gains as Charging Network Expands).
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 Best Leveraged ETFs of June
The U.S. stock market experienced a promising start to June but encountered volatility in the latter half. This volatility was triggered by a hawkish signal from the Federal Reserve, which intensified inversions in the yield curve. As a result of the Fed's indication of future interest-rate hikes, certain sections of the U.S. bond yield curve experienced more pronounced inversions, indicating investor concerns about an impending recession.
Despite this, all three major indices managed to be in the green, with the S&P 500 and the Nasdaq Composite Index gaining about 4%, and the Dow Jones Industrial Average advancing 3.2%. 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 gained more than 25% in June.
These include Direxion Daily TSLA Bull 1.5X Shares (TSLL - Free Report) , Direxion Daily Homebuilders & Supplies Bull 3X Shares (NAIL - Free Report) , MicroSectors Travel 3x Leveraged ETN (FLYU - Free Report) , Direxion Daily Consumer Discretionary Bull 3X Shares (WANT - Free Report) and Direxion Daily Electric and Autonomous Vehicles Bull 2X Shares (EVAV - Free Report) . These funds will continue to be investors’ darlings, at least in the near term, provided the sentiments remain bullish.
The Fed kept interest rates steady in the latest meeting at a range of 5% to 5.25%. This pause came after 10 consecutive rate hikes. Economic activity continued to expand at a modest pace, with job gains being robust, the unemployment rate remaining low, and inflation moderating (read: 5 ETF Zones Primed for 2023 Growth Amid Rate Hike Prospects).
The economy added 339,000 jobs in May, up from April’s revised job gains number of 294,000, and hotter than 190,000 jobs that economists were expecting. Meanwhile, inflation cooled down for the eleventh consecutive month in May. The Consumer Price Index revealed that headline inflation rose 0.1% over the last month and 4% year over year in May, representing a slowdown from April's 0.4% month-over-month increase and a 4.9% annual gain. This marks the smallest yearly advance since March 2021.
Retail sales again rose modestly in May, showcasing resilient consumer demand in the face of mounting economic challenges. Meanwhile, consumer confidence unexpectedly jumped to an 18-month high in June amid lingering fears of a recession. The U.S. housing sector has also shown immense improvement, with homebuilder confidence reaching its highest level in almost a year.
We have profiled the ETFs in detail below:
Direxion Daily TSLA Bull 1.5X Shares (TSLL - Free Report) – Up 51.8%
With AUM of $689 million, Direxion Daily TSLA Bull 1.5X Shares is just an 11-month-old ETF and is by far the largest U.S.-listed single-stock ETF on the market today. TSLL offers 1.5 times (150%) the daily percentage change of the common stock of Tesla, charging 95 bps in annual fees. It trades in an average daily volume of 13 million shares (read: Single-Stock Tesla ETF Racing to Hit Billion-Dollar AUM).
Direxion Daily Homebuilders & Supplies Bull 3X Shares (NAIL - Free Report) - Up 46.6%
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, charging an annual fee of 93 bps. Direxion Daily Homebuilders & Supplies Bull 3X Shares trades in a good average daily volume of about 213,000 shares and has accumulated $232.4 million in its asset base.
MicroSectors Travel 3x Leveraged ETN (FLYU - Free Report) – Up 43%
MicroSectors Travel 3x Leveraged ETN offers three times exposure to the performance of the MerQube MicroSectors U.S. Travel Index. It has accumulated $6 million in its asset base since its debut in late June last year and charges 95 bps in annual fees. MicroSectors Travel 3x Leveraged ETN trades in a paltry volume of 4,000 shares per day, on average.
Direxion Daily Consumer Discretionary Bull 3X Shares (WANT - Free Report) – Up 33.6%
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 $34.9 million and an average daily volume of 66,000 shares.
Direxion Daily Electric and Autonomous Vehicles Bull 2X Shares (EVAV - Free Report) - Up 26.9%
Direxion Daily Electric and Autonomous Vehicles Bull 2X Shares seeks to track two times the performance of the Indxx US Electric and Autonomous Vehicles Index. It has accumulated $6 million in its asset base. Direxion Daily Electric and Autonomous Vehicles Bull 2X Shares charges 95 bps in annual fees and trades in an average daily volume of 6,000 shares (read: Top EV ETFs for Electrifying Gains as Charging Network Expands).
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.