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5 Leveraged ETFs That Gained More Than 200% in 2023
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This year has been a banner year for Wall Street. With just two weeks left before year-end, the Dow Jones is trading at all-time high while the S&P 500, Nasdaq Composite, small-cap Russell 2000 and S&P MidCap 400 are all trading at 52-week highs. In fact, the tech-heavy Nasdaq Composite Index is outperforming, having risen 52% year to date. The S&P 500 Index has moved 22.9% higher, while the Dow Jones has gained 12.5% (read: 5 Stocks Powering Dow ETF's 3-Month Outperformance).
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 GraniteShares 1.5x Long COIN Daily ETF (CONL - Free Report) , GraniteShares 1.5x Long NVDA Daily ETF (NVDL - Free Report) , BMO REX MicroSectors FANG+ Index 3X Leveraged ETN (FNGU - Free Report) , GraniteShares 1.5x Long Meta Daily ETF (FBL - Free Report) and Direxion Daily Homebuilders & Supplies Bull 3X Shares (NAIL - Free Report) . These funds will continue to be investors’ darlings, going into the New Year, provided the sentiments remain bullish.
A significant portion of the gains can be attributed to the strong performance of a group of large-cap stocks, referred to as the "Magnificent Seven." This group, comprising Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta Platforms and Tesla, has jumped about 75% in 2023. The perceived safety of these investments, their size, competitive advantages and the potential of emerging technologies like artificial intelligence have been the key factors driving their performances.
After a sluggish third quarter, the stocks have made a solid comeback in recent weeks on optimism that the Fed is done with interest rate hikes. The Federal Reserve Chair Jerome Powell, in the latest meeting, hinted at a major policy shift as inflation is easing and the economy is holding up better. He signaled three rate cuts for the next year, compared with the previous forecast of two rate cuts in 2024. The federal funds rate is expected to be in the range of 4.4-4.9%, down from the current 5.25% to 5.50%. This indicates that the Fed will cut rates by a total of 0.75% next year, indicating that the historic rate-hiking campaign might be ending (read: Sector ETFs to Benefit From Fed Rate Cut Talks).
Americans are now feeling more confident about the economy than they did over the past few months. Consumer sentiment rebounded sharply in early December as worries about inflation receded. Retail sales also posted surprise growth in November after declining in the prior month. All this signals a strong economy, buoying investors' confidence.
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.
GraniteShares 1.5x Long COIN Daily ETF (CONL - Free Report) – Up 487.4%
GraniteShares 1.5x Long COIN Daily ETF seeks 1.5 times (150%) the daily percentage change of the common stock of Coinbase Global Inc (COIN). It has accumulated $22.8 million in its asset base while trading in an average daily volume of 299,000 shares. GraniteShares 1.5x Long COIN Daily ETF charges 99 bps in annual fees.
GraniteShares 1.5x Long NVDA Daily ETF (NVDL - Free Report) – Up 425%
GraniteShares 1.5x Long NVDA Daily ETF magnifies exposure to a single trade, seeking 1.5 times (150%) the daily percentage change of the common stock of NVIDIA. It has an expense ratio of 1.15% and trades in a volume of 597,000 shares a day on average. GraniteShares 1.5x Long NVDA Daily ETF has amassed $251.8 million in its asset base.
BMO REX MicroSectors FANG+ Index 3X Leveraged ETN (FNGU - Free Report) – Up 419.6%
BMO REX MicroSectors FANG+ Index 3X Leveraged ETN seeks to offer three times leveraged exposure to the NYSE FANG Index. The Index includes 10 highly liquid stocks that represent industry leaders across today’s tech and internet/media companies. BMO REX MicroSectors FANG+ Index 3X Leveraged ETN charging 95 bps in annual fees. It has accumulated $2.8 billion in its asset base and trades in an average daily volume of 2 million shares (read: 5 Tech ETFs that Crushed the Magnificent Seven ETFs in 2023).
GraniteShares 1.5x Long Meta Daily ETF (FBL - Free Report) – Up 305.5%
GraniteShares 1.5x Long Meta Daily ETF tracks the 1.5 times the performance of the stock of Meta Platforms (META). It has accumulated $13 million in its asset base and charges 1.15% in annual fees. GraniteShares 1.5x Long Meta Daily ETF trades in an average daily volume of 18,000 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, charging an annual fee of 93 bps. Direxion Daily Homebuilders & Supplies Bull 3X Shares trades in a good average daily volume of about 320,000 shares and has accumulated $301.1 million in its asset base.
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5 Leveraged ETFs That Gained More Than 200% in 2023
This year has been a banner year for Wall Street. With just two weeks left before year-end, the Dow Jones is trading at all-time high while the S&P 500, Nasdaq Composite, small-cap Russell 2000 and S&P MidCap 400 are all trading at 52-week highs. In fact, the tech-heavy Nasdaq Composite Index is outperforming, having risen 52% year to date. The S&P 500 Index has moved 22.9% higher, while the Dow Jones has gained 12.5% (read: 5 Stocks Powering Dow ETF's 3-Month Outperformance).
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 GraniteShares 1.5x Long COIN Daily ETF (CONL - Free Report) , GraniteShares 1.5x Long NVDA Daily ETF (NVDL - Free Report) , BMO REX MicroSectors FANG+ Index 3X Leveraged ETN (FNGU - Free Report) , GraniteShares 1.5x Long Meta Daily ETF (FBL - Free Report) and Direxion Daily Homebuilders & Supplies Bull 3X Shares (NAIL - Free Report) . These funds will continue to be investors’ darlings, going into the New Year, provided the sentiments remain bullish.
A significant portion of the gains can be attributed to the strong performance of a group of large-cap stocks, referred to as the "Magnificent Seven." This group, comprising Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta Platforms and Tesla, has jumped about 75% in 2023. The perceived safety of these investments, their size, competitive advantages and the potential of emerging technologies like artificial intelligence have been the key factors driving their performances.
After a sluggish third quarter, the stocks have made a solid comeback in recent weeks on optimism that the Fed is done with interest rate hikes. The Federal Reserve Chair Jerome Powell, in the latest meeting, hinted at a major policy shift as inflation is easing and the economy is holding up better. He signaled three rate cuts for the next year, compared with the previous forecast of two rate cuts in 2024. The federal funds rate is expected to be in the range of 4.4-4.9%, down from the current 5.25% to 5.50%. This indicates that the Fed will cut rates by a total of 0.75% next year, indicating that the historic rate-hiking campaign might be ending (read: Sector ETFs to Benefit From Fed Rate Cut Talks).
Americans are now feeling more confident about the economy than they did over the past few months. Consumer sentiment rebounded sharply in early December as worries about inflation receded. Retail sales also posted surprise growth in November after declining in the prior month. All this signals a strong economy, buoying investors' confidence.
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.
GraniteShares 1.5x Long COIN Daily ETF (CONL - Free Report) – Up 487.4%
GraniteShares 1.5x Long COIN Daily ETF seeks 1.5 times (150%) the daily percentage change of the common stock of Coinbase Global Inc (COIN). It has accumulated $22.8 million in its asset base while trading in an average daily volume of 299,000 shares. GraniteShares 1.5x Long COIN Daily ETF charges 99 bps in annual fees.
GraniteShares 1.5x Long NVDA Daily ETF (NVDL - Free Report) – Up 425%
GraniteShares 1.5x Long NVDA Daily ETF magnifies exposure to a single trade, seeking 1.5 times (150%) the daily percentage change of the common stock of NVIDIA. It has an expense ratio of 1.15% and trades in a volume of 597,000 shares a day on average. GraniteShares 1.5x Long NVDA Daily ETF has amassed $251.8 million in its asset base.
BMO REX MicroSectors FANG+ Index 3X Leveraged ETN (FNGU - Free Report) – Up 419.6%
BMO REX MicroSectors FANG+ Index 3X Leveraged ETN seeks to offer three times leveraged exposure to the NYSE FANG Index. The Index includes 10 highly liquid stocks that represent industry leaders across today’s tech and internet/media companies. BMO REX MicroSectors FANG+ Index 3X Leveraged ETN charging 95 bps in annual fees. It has accumulated $2.8 billion in its asset base and trades in an average daily volume of 2 million shares (read: 5 Tech ETFs that Crushed the Magnificent Seven ETFs in 2023).
GraniteShares 1.5x Long Meta Daily ETF (FBL - Free Report) – Up 305.5%
GraniteShares 1.5x Long Meta Daily ETF tracks the 1.5 times the performance of the stock of Meta Platforms (META). It has accumulated $13 million in its asset base and charges 1.15% in annual fees. GraniteShares 1.5x Long Meta Daily ETF trades in an average daily volume of 18,000 shares.
Direxion Daily Homebuilders & Supplies Bull 3X Shares (NAIL - Free Report) - Up 253%
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 320,000 shares and has accumulated $301.1 million in its asset base.