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5 Top-Performing Leveraged ETFs of Blockbuster November
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Wall Street wrapped up its best month of 2023, with all three major indices logging in blockbuster gains. The Nasdaq Composite Index was the outperformer, rising 10.7% — the best monthly gain since July 2022. Meanwhile, the S&P 500 and Dow Jones Industrial advanced 8.9% and 8.8%, respectively. The former registered the best monthly gain since July 2022, whereas the latter marks its best monthly performance since October 2022.
This has resulted in increased 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 are leaders in their segments.
These include Direxion Daily Homebuilders & Supplies Bull 3X Shares (NAIL - Free Report) , MicroSectors U.S. Big Banks Index 3X Leveraged ETN (BNKU - Free Report) , AdvisorShares MSOS 2x Daily ETF (MSOX - Free Report) , MicroSectors Travel 3x Leveraged ETN (FLYU - Free Report) and MicroSectors Solactive FANG & Innovation 3X Leveraged ETN (BULZ - Free Report) . These funds will continue to be investors’ darlings, at least in the near term, provided the sentiments remain bullish.
The monster rally was driven by optimism that the Fed is done with interest rate hikes, which has pushed the Treasury yields down and rekindled investors’ risk-on trade. Yields on U.S. Treasuries saw the biggest monthly drop since 2008 (read: Treasury ETFs on Track for Best Month Since March).
Better-than-expected earnings added to the strength. The overall Q3 earnings picture is stable and largely positive. The third-quarter reporting cycle recorded year-over-year earnings growth after three back-to-back quarters of earnings declines. However, there has been a notable acceleration in negative estimate revisions for the fourth quarter over the last few weeks, a development that reverses the largely favorable revision trend of the preceding six months (read: 5 Best ETF Charts of This Earnings Season).
Leveraged ETFs
Leveraged ETFs provide multiple exposures (2X or 3X) to the daily performance of the underlying index. These funds employ various investment strategies, such as the use of swaps, futures contracts and other derivative instruments to accomplish their objectives. Due to their compounding effect, investors can enjoy higher returns in a short period, provided the trend remains a friend.
Since most of these ETFs seek to attain their goals on a daily basis, their performances could vary significantly from the performance of their underlying index or benchmark over a longer period compared with a shorter period (such as weeks, months or years) due to their compounding effect (see: all Leveraged Equity ETFs here).
Investors should also note that leveraged ETFs involve a great deal of risk than traditional funds. They are often more costly and can be less tax-efficient, as they can see capital gains through the use of swaps and other derivative instruments.
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 325,000 shares and has accumulated $217.8 million in its asset base.
MicroSectors U.S. Big Banks Index 3X Leveraged ETN (BNKU - Free Report) – Up 64.6%
MicroSectors U.S. Big Banks Index 3X Leveraged ETN seeks to offer three times exposure to the Solactive MicroSectors U.S. Big Banks Index. The ETN has accumulated $156.4 million in its asset base. MicroSectors U.S. Big Banks Index 3X Leveraged ETN charges 95 bps in annual fees and trades in an average daily volume of 1 million shares.
AdvisorShares MSOS 2x Daily ETF is actively managed and designed for sophisticated investors looking to gain magnified exposure to the U.S. cannabis sector. It offers daily investment results that correspond to two times the daily performance of the AdvisorShares Pure US Cannabis ETF. AdvisorShares MSOS 2x Daily ETF has accumulated $26 million in its asset base. It charges 1.13% in annual fees and trades in a volume of 463,000 shares a day on average.
MicroSectors Travel 3x Leveraged ETN offers three times exposure to the performance of the MerQube MicroSectors U.S. Travel Index. It has accumulated $5.2 million in its asset base and charges 95 bps in annual fees. MicroSectors Travel 3x Leveraged ETN trades in a paltry volume of 6,000 shares per day, on average (read: 5 ETFs to Make the Most of Solid Thanksgiving Travel Trend).
MicroSectors Solactive FANG & Innovation 3X Leveraged ETN seeks three times leverage exposure to the performance of the Solactive FANG Innovation Index, which includes 15 highly liquid stocks focused on building tomorrow’s technology today. It has an AUM of $755.2 million and charges 95 bps in annual fees. MicroSectors Solactive FANG & Innovation 3X Leveraged ETN trades in a volume of 159,000 shares a day on average.
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5 Top-Performing Leveraged ETFs of Blockbuster November
Wall Street wrapped up its best month of 2023, with all three major indices logging in blockbuster gains. The Nasdaq Composite Index was the outperformer, rising 10.7% — the best monthly gain since July 2022. Meanwhile, the S&P 500 and Dow Jones Industrial advanced 8.9% and 8.8%, respectively. The former registered the best monthly gain since July 2022, whereas the latter marks its best monthly performance since October 2022.
This has resulted in increased 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 are leaders in their segments.
These include Direxion Daily Homebuilders & Supplies Bull 3X Shares (NAIL - Free Report) , MicroSectors U.S. Big Banks Index 3X Leveraged ETN (BNKU - Free Report) , AdvisorShares MSOS 2x Daily ETF (MSOX - Free Report) , MicroSectors Travel 3x Leveraged ETN (FLYU - Free Report) and MicroSectors Solactive FANG & Innovation 3X Leveraged ETN (BULZ - Free Report) . These funds will continue to be investors’ darlings, at least in the near term, provided the sentiments remain bullish.
The monster rally was driven by optimism that the Fed is done with interest rate hikes, which has pushed the Treasury yields down and rekindled investors’ risk-on trade. Yields on U.S. Treasuries saw the biggest monthly drop since 2008 (read: Treasury ETFs on Track for Best Month Since March).
Better-than-expected earnings added to the strength. The overall Q3 earnings picture is stable and largely positive. The third-quarter reporting cycle recorded year-over-year earnings growth after three back-to-back quarters of earnings declines. However, there has been a notable acceleration in negative estimate revisions for the fourth quarter over the last few weeks, a development that reverses the largely favorable revision trend of the preceding six months (read: 5 Best ETF Charts of This Earnings Season).
Leveraged ETFs
Leveraged ETFs provide multiple exposures (2X or 3X) to the daily performance of the underlying index. These funds employ various investment strategies, such as the use of swaps, futures contracts and other derivative instruments to accomplish their objectives. Due to their compounding effect, investors can enjoy higher returns in a short period, provided the trend remains a friend.
Since most of these ETFs seek to attain their goals on a daily basis, their performances could vary significantly from the performance of their underlying index or benchmark over a longer period compared with a shorter period (such as weeks, months or years) due to their compounding effect (see: all Leveraged Equity ETFs here).
Investors should also note that leveraged ETFs involve a great deal of risk than traditional funds. They are often more costly and can be less tax-efficient, as they can see capital gains through the use of swaps and other derivative instruments.
Direxion Daily Homebuilders & Supplies Bull 3X Shares (NAIL - Free Report) - Up 72%
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 325,000 shares and has accumulated $217.8 million in its asset base.
MicroSectors U.S. Big Banks Index 3X Leveraged ETN (BNKU - Free Report) – Up 64.6%
MicroSectors U.S. Big Banks Index 3X Leveraged ETN seeks to offer three times exposure to the Solactive MicroSectors U.S. Big Banks Index. The ETN has accumulated $156.4 million in its asset base. MicroSectors U.S. Big Banks Index 3X Leveraged ETN charges 95 bps in annual fees and trades in an average daily volume of 1 million shares.
AdvisorShares MSOS 2x Daily ETF (MSOX - Free Report) – Up 62.4%
AdvisorShares MSOS 2x Daily ETF is actively managed and designed for sophisticated investors looking to gain magnified exposure to the U.S. cannabis sector. It offers daily investment results that correspond to two times the daily performance of the AdvisorShares Pure US Cannabis ETF. AdvisorShares MSOS 2x Daily ETF has accumulated $26 million in its asset base. It charges 1.13% in annual fees and trades in a volume of 463,000 shares a day on average.
MicroSectors Travel 3x Leveraged ETN (FLYU - Free Report) – Up 58.8%
MicroSectors Travel 3x Leveraged ETN offers three times exposure to the performance of the MerQube MicroSectors U.S. Travel Index. It has accumulated $5.2 million in its asset base and charges 95 bps in annual fees. MicroSectors Travel 3x Leveraged ETN trades in a paltry volume of 6,000 shares per day, on average (read: 5 ETFs to Make the Most of Solid Thanksgiving Travel Trend).
MicroSectors Solactive FANG & Innovation 3X Leveraged ETN (BULZ - Free Report) – Up 57.1%
MicroSectors Solactive FANG & Innovation 3X Leveraged ETN seeks three times leverage exposure to the performance of the Solactive FANG Innovation Index, which includes 15 highly liquid stocks focused on building tomorrow’s technology today. It has an AUM of $755.2 million and charges 95 bps in annual fees. MicroSectors Solactive FANG & Innovation 3X Leveraged ETN trades in a volume of 159,000 shares a day on average.