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After a weak start to 2024, Wall Street regained momentum, driven by a solid earnings season, a resilient economy and a technology surge. The strong performances have resulted in increased demand for leveraged ETFs as investors seek to register big gains in a short span.
Here, 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 AdvisorShares MSOS 2x Daily ETF (MSOX - Free Report) , ProShares Ultra Semiconductors (USD - Free Report) , BMO REX MicroSectors FANG+ Index 3X Leveraged ETN (FNGU - Free Report) , Direxion Daily Pharmaceutical & Medical Bull 3X Shares (PILL - Free Report) , and Direxion Daily Semiconductor Bull 3x Shares (SOXL - Free Report) . These funds will continue to be investors’ darlings, at least in the near term, provided the sentiments remain bullish.
Total fourth-quarter earnings of the 387 S&P 500 members who have reported results so far increased 5.1% from the prior-year period on 3.4% higher revenues. Of the companies that reported results, 79.1% beat EPS estimates and 65.1% surpassed revenue estimates. The pace of earnings and revenue growth represents an acceleration from the last couple of quarters, with the technology sector being a major contributor to this improving trend. Notably, the earnings growth is the best growth rate for the S&P 500 companies since the 6.5% earnings growth rate in the first quarter of 2022.
The resilience of the U.S. economy has played a crucial role in the rise of the stock market but reduced the likelihood of a near-term rate cut. Factors like robust retail sales, consumer sentiment and a cooling trend in the producer price index indicate the possibility of the Fed achieving a soft landing, bringing inflation back to target without triggering a recession. This economic resilience, coupled with surging shares of big technology companies and optimism over artificial intelligence, has been a significant driver of the market's upward trajectory.
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 more 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.
AdvisorShares MSOS 2x Daily ETF is 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 $80.9 million in its asset base. It charges 1.13% in annual fees (read: Cannabis ETFs Outperform in January).
ProShares Ultra Semiconductors (USD - Free Report) – Up 42.7%
ProShares Ultra Semiconductors offers two times exposure to the daily performance of the Dow Jones U.S. Semiconductors Index. It has gathered $553.7 million in its asset base and charges 95 bps in fees per year from investors.
BMO REX MicroSectors FANG+ Index 3X Leveraged ETN (FNGU - Free Report) – Up 36.1%
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 charges 95 bps in annual fees. It has accumulated $4.2 billion in its asset base.
Direxion Daily Pharmaceutical & Medical Bull 3X Shares (PILL - Free Report) – Up 23.3%
Direxion Daily Pharmaceutical & Medical Bull 3X Shares targets the pharma corner of the broad healthcare sector and seeks to deliver three times the daily performance of the S&P Pharmaceuticals Select Industry Index. It has managed $16.3 million in AUM and charges 95 bps in annual fees.
Direxion Daily Semiconductor Bull 3x Shares targets the semiconductor corner of the technology sector with three times leveraged exposure to the NYSE Semiconductor Index. Direxion Daily Semiconductor Bull 3x Shares has amassed about $8.9 billion in its asset base, while charging 89 bps in fees per year (read: Semiconductor ETFs Look Well Poised Post Q4 Earnings).
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5 Best Leveraged ETFs of First Half of Q1
After a weak start to 2024, Wall Street regained momentum, driven by a solid earnings season, a resilient economy and a technology surge. The strong performances have resulted in increased demand for leveraged ETFs as investors seek to register big gains in a short span.
Here, 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 AdvisorShares MSOS 2x Daily ETF (MSOX - Free Report) , ProShares Ultra Semiconductors (USD - Free Report) , BMO REX MicroSectors FANG+ Index 3X Leveraged ETN (FNGU - Free Report) , Direxion Daily Pharmaceutical & Medical Bull 3X Shares (PILL - Free Report) , and Direxion Daily Semiconductor Bull 3x Shares (SOXL - Free Report) . These funds will continue to be investors’ darlings, at least in the near term, provided the sentiments remain bullish.
Total fourth-quarter earnings of the 387 S&P 500 members who have reported results so far increased 5.1% from the prior-year period on 3.4% higher revenues. Of the companies that reported results, 79.1% beat EPS estimates and 65.1% surpassed revenue estimates. The pace of earnings and revenue growth represents an acceleration from the last couple of quarters, with the technology sector being a major contributor to this improving trend. Notably, the earnings growth is the best growth rate for the S&P 500 companies since the 6.5% earnings growth rate in the first quarter of 2022.
The resilience of the U.S. economy has played a crucial role in the rise of the stock market but reduced the likelihood of a near-term rate cut. Factors like robust retail sales, consumer sentiment and a cooling trend in the producer price index indicate the possibility of the Fed achieving a soft landing, bringing inflation back to target without triggering a recession. This economic resilience, coupled with surging shares of big technology companies and optimism over artificial intelligence, has been a significant driver of the market's upward trajectory.
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 more 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.
AdvisorShares MSOS 2x Daily ETF (MSOX - Free Report) – Up 48.1%
AdvisorShares MSOS 2x Daily ETF is 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 $80.9 million in its asset base. It charges 1.13% in annual fees (read: Cannabis ETFs Outperform in January).
ProShares Ultra Semiconductors (USD - Free Report) – Up 42.7%
ProShares Ultra Semiconductors offers two times exposure to the daily performance of the Dow Jones U.S. Semiconductors Index. It has gathered $553.7 million in its asset base and charges 95 bps in fees per year from investors.
BMO REX MicroSectors FANG+ Index 3X Leveraged ETN (FNGU - Free Report) – Up 36.1%
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 charges 95 bps in annual fees. It has accumulated $4.2 billion in its asset base.
Direxion Daily Pharmaceutical & Medical Bull 3X Shares (PILL - Free Report) – Up 23.3%
Direxion Daily Pharmaceutical & Medical Bull 3X Shares targets the pharma corner of the broad healthcare sector and seeks to deliver three times the daily performance of the S&P Pharmaceuticals Select Industry Index. It has managed $16.3 million in AUM and charges 95 bps in annual fees.
Direxion Daily Semiconductor Bull 3x Shares (SOXL - Free Report) – Up 86.9%
Direxion Daily Semiconductor Bull 3x Shares targets the semiconductor corner of the technology sector with three times leveraged exposure to the NYSE Semiconductor Index. Direxion Daily Semiconductor Bull 3x Shares has amassed about $8.9 billion in its asset base, while charging 89 bps in fees per year (read: Semiconductor ETFs Look Well Poised Post Q4 Earnings).