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November Turns Out to Be the Best Month: 5 Top Leveraged ETFs (Revised)

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November turned out to be the strongest month for the U.S. stock market, driven by the post-election rally seen on the back of President-elect Donald Trump’s victory. The rally was broad-based across various market capitalizations and sectors.

The Dow Jones and the S&P 500 Index logged in the best month of 2024, having risen 7.5% and 5.7%, respectively. The tech-heavy Nasdaq Composite Index saw its most positive month since May, gaining 6.2%. The small-cap Russell 2000 Index also registered its biggest monthly gain of the year, surging more than 10%. This resulted in a huge demand for leveraged ETFs as investors looked to register big gains in a short span. 

We have highlighted a bunch of the best-performing leveraged equity ETFs that led the space last month. These include GraniteShares 2x Long TSLA Daily ETF (TSLR - Free Report) , Tradr 2X Long Innovation ETF (TARK - Free Report) , Direxion Daily Regional Banks Bull 3x Shares (DPST - Free Report) , Direxion Daily Cloud Computing Bull 2X Shares (CLDL - Free Report) and Direxion Daily Consumer Discretionary Bull 3X Shares (WANT - Free Report) . These funds seek to register big gains in a short span and will continue their strong trend, at least in the near term, provided the sentiments remain bullish.

Wall Street remains optimistic about the incoming administration’s economic agenda. Though Trump’s policies on restricting illegal immigration, enacting new tariffs, lowering taxes and reducing regulations will accelerate inflation, limiting the Federal Reserve's ability to cut rates, they will likely boost the economy. The anticipation of greater tariff barriers and a step to move manufacturing back home is expected to drive stocks higher (read: Top ETF Winners from the Trump Trade).

Federal Reserve Chair Jerome Powell, in the latest meeting, slashed interest rates for the second time this year. The key interest rate was cut by 25 bps, bringing down the benchmark rate to 4.5%-4.75%, following the 50-bps cut in September 2024. Lower interest rates generally lead to reduced borrowing costs, helping businesses to expand their operations more easily and resulting in increased profitability. This, in turn, stimulates economic growth and provides a boost to the stock market.

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.

ETFs in Focus

GraniteShares 2x Long TSLA Daily ETF (TSLR - Free Report) – Up 63.3%

GraniteShares 2x Long TSLA Daily ETF also seeks to offer two times (200%) the daily percentage change of the common stock of Tesla, charging 95 bps in annual fees. It has managed assets worth $56.1 million in its asset base.

Tradr 2X Long Innovation ETF (TARK - Free Report) – Up 40%

Tradr 2X Long Innovation ETF Fund seeks to achieve two times the daily return of the ARK Innovation ETF (ARKK). It has accumulated $138.7 million in its asset base and charges 1.35% in annual fees. TARK trades in an average daily volume of around 35,000 shares.

Direxion Daily Regional Banks Bull 3x Shares (DPST - Free Report) - Up 38%

Direxion Daily Regional Banks Bull 3x Shares seeks to deliver thrice (300%) the returns of the S&P Regional Banks Select Industry Index, charging 90 bps in fees per year. DPST has amassed $943.9 million in its asset base and trades in a volume of around 977,000 shares a day on average.

Direxion Daily Cloud Computing Bull 2X Shares (CLDL - Free Report) – Up 35.2%

Direxion Daily Cloud Computing Bull 2X Shares offers two times leveraged exposure to the Indxx USA Cloud Computing Index. The product has accumulated about $8 million in its asset base while charging 95 bps in fees per year. It exchanges around 20,000 shares a day on average.

Direxion Daily Consumer Discretionary Bull 3X Shares (WANT - Free Report) – Up 31.9%

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 an AUM of $31.9 million and an average daily volume of 28,000 shares (read: Leveraged ETFs to Make the Most of Thanksgiving Spend).

(We are reissuing this article to correct a mistake. The original article, issued on December 2, 2024, should no longer be relied upon.)

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