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5 Leveraged ETFs That Gained More Than 45% in Second Quarter
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Wall Street wrapped the second quarter of 2023 on a high note, with a broad rally across various sectors. Initially, the rally, which was driven by the mega-cap tech stocks on enthusiasm surrounding artificial intelligence (AI), has now reached other sectors.
This has resulted in huge demand for leveraged ETFs as investors seek 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 45% in the second quarter.
These include BMO REX MicroSectors FANG+ Index 3X Leveraged ETN (FNGU - Free Report) , Direxion Daily Homebuilders & Supplies Bull 3X Shares (NAIL - Free Report) , Direxion Daily Consumer Discretionary Bull 3X Shares (WANT - Free Report) , ProShares UltraPro QQQ (TQQQ - Free Report) and MicroSectors Travel 3x Leveraged ETN (FLYU - Free Report) . These funds will continue to be investors’ darlings, at least in the near term, provided the sentiments remain bullish.
The tech-heavy Nasdaq Composite Index has outperformed, gaining 13% since the start of April, while the S&P 500 and the Dow Jones are up 8.8% and 2.5%, respectively, so far. Notably, the S&P 500 Index entered a new bull market early in June. Easing inflation, stronger-than-expected corporate earnings and hopes that the Fed is nearing the end of its interest rate-hike cycle led the rally on Wall Street (read: Nasdaq Celebrates Best First Half in 40 Years: ETFs in Focus).
Further, economic activity continued to expand at a modest pace, with job gains being robust, the unemployment rate remaining low and inflation moderating. Inflation has moderated after hitting a 40-year high last summer but still stands well above the Fed’s 2% target. The Federal Reserve, in its latest meeting, kept the rates unchanged after raising them for the 10th consecutive time to combat elevated inflation. However, the central bank maintained its hawkish stance, indicating another rate hike in the near future.
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 expected. 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:
BMO REX MicroSectors FANG+ Index 3X Leveraged ETN (FNGU - Free Report) – Up 90.8%
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. It has accumulated $2.3 billion in its asset base and trades in an average daily volume of 2.6 million shares (read: 5 Best Leveraged ETFs of the New Bull Market).
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 $258.9 million in its asset base.
Direxion Daily Consumer Discretionary Bull 3X Shares offers leveraged exposure to 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 $40.8 million and an average daily volume of 66,000 shares (read: Why Is It the Time to Invest in Retail ETFs?).
ProShares UltraPro QQQ offers three times the leveraged exposure to the NASDAQ-100 Index. It has amassed $18.8 billion in AUM and trades in a heavy volume of 103.4 million shares, on average. It charges 86 bps in annual fees.
MicroSectors Travel 3x Leveraged ETN offers three times exposure to the performance of the MerQube MicroSectors U.S. Travel Index. It has accumulated $6.9 million in its asset base since its debut in 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.
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 Leveraged ETFs That Gained More Than 45% in Second Quarter
Wall Street wrapped the second quarter of 2023 on a high note, with a broad rally across various sectors. Initially, the rally, which was driven by the mega-cap tech stocks on enthusiasm surrounding artificial intelligence (AI), has now reached other sectors.
This has resulted in huge demand for leveraged ETFs as investors seek 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 45% in the second quarter.
These include BMO REX MicroSectors FANG+ Index 3X Leveraged ETN (FNGU - Free Report) , Direxion Daily Homebuilders & Supplies Bull 3X Shares (NAIL - Free Report) , Direxion Daily Consumer Discretionary Bull 3X Shares (WANT - Free Report) , ProShares UltraPro QQQ (TQQQ - Free Report) and MicroSectors Travel 3x Leveraged ETN (FLYU - Free Report) . These funds will continue to be investors’ darlings, at least in the near term, provided the sentiments remain bullish.
The tech-heavy Nasdaq Composite Index has outperformed, gaining 13% since the start of April, while the S&P 500 and the Dow Jones are up 8.8% and 2.5%, respectively, so far. Notably, the S&P 500 Index entered a new bull market early in June. Easing inflation, stronger-than-expected corporate earnings and hopes that the Fed is nearing the end of its interest rate-hike cycle led the rally on Wall Street (read: Nasdaq Celebrates Best First Half in 40 Years: ETFs in Focus).
Further, economic activity continued to expand at a modest pace, with job gains being robust, the unemployment rate remaining low and inflation moderating. Inflation has moderated after hitting a 40-year high last summer but still stands well above the Fed’s 2% target. The Federal Reserve, in its latest meeting, kept the rates unchanged after raising them for the 10th consecutive time to combat elevated inflation. However, the central bank maintained its hawkish stance, indicating another rate hike in the near future.
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 expected. 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:
BMO REX MicroSectors FANG+ Index 3X Leveraged ETN (FNGU - Free Report) – Up 90.8%
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. It has accumulated $2.3 billion in its asset base and trades in an average daily volume of 2.6 million shares (read: 5 Best Leveraged ETFs of the New Bull Market).
Direxion Daily Homebuilders & Supplies Bull 3X Shares (NAIL - Free Report) - Up 65.7%
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 $258.9 million in its asset base.
Direxion Daily Consumer Discretionary Bull 3X Shares (WANT - Free Report) – Up 49.3%
Direxion Daily Consumer Discretionary Bull 3X Shares offers leveraged exposure to 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 $40.8 million and an average daily volume of 66,000 shares (read: Why Is It the Time to Invest in Retail ETFs?).
ProShares UltraPro QQQ (TQQQ - Free Report) – Up 47.6%
ProShares UltraPro QQQ offers three times the leveraged exposure to the NASDAQ-100 Index. It has amassed $18.8 billion in AUM and trades in a heavy volume of 103.4 million shares, on average. It charges 86 bps in annual fees.
MicroSectors Travel 3x Leveraged ETN (FLYU - Free Report) – Up 46.7%
MicroSectors Travel 3x Leveraged ETN offers three times exposure to the performance of the MerQube MicroSectors U.S. Travel Index. It has accumulated $6.9 million in its asset base since its debut in 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.
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.