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Top 6 Leveraged ETF Areas of First-Half 2020

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The outbreak of SARS (severe acute respiratory syndrome)-like coronavirus in late January was the main event of the first quarter. The resultant lockdowns which fell mainly in the second quarter weighed heavily on global economies. Many economies went in recession while Wall Street snapped its longest bull run ever in March and went on to record its worst quarter since fourth-quarter 2008 (read: Top ETF Stories of First Quarter).

The second quarter witnessed the historic event of negative oil price in April due to higher supplies, poor demand and a shortage of storage. Though economies started reporting upbeat economic data points with the lifting of lockdowns, fears of a second of wave of the contagion became rife at the end of Q2.

Global central banks and governments launched a trillion-dollar stimulus in the first half. As a result, global stocks rallied in Q2. Since market hit lows on Mar 23, the S&P 500 has gained roughly 40% till early June, marking its best 50-day rally in history.

Overall, the tech and healthcare sectors have emerged winners this year due to social distancing norms, and the push for treatment and vaccine development. And needless to say, safe-haven assets gold and U.S. treasury bonds benefited. Against this backdrop, below we highlight a few leveraged ETF areas of the first half of 2020.

Volatility

The year so far has been filled with ups and downs. So, volatility ETFs and ETNs like VelocityShares Daily 2x VIX Short-Term ETN (up 203.6%) and ProShares Ultra VIX Short-Term Futures ETF (UVXY - Free Report) (up 190.9%) were the winners.

Energy

As discussed above, crude oil has been on a roller-coaster ride in recent months. After crashing in mid-April, WTI crude oil spiked 88% in May on an improved demand outlook based on the reopening of economies. It was the best monthly performance since 1983.Direxion Daily S&P Oil & Gas Exp. & Prod. Bull 2X Shares (GUSH - Free Report) (up 183.4%) and Direxion Daily Energy Bull 3X ETF (ERX - Free Report) (up 87.2%) topped in the space.

FANG+

The Internet and the broader tech space have been performing well this year. Notably, social distancing triggered by the coronavirus outbreak has benefited communications and activities over Internet in recent months. Cloud computing has been another hot space because of its rising usage in the work-learn-and-entertainment-from-home activities. MicroSectors FANG+ Index 3X Leveraged ETN FNGU (up 59.67%) and MicroSectors FANG+ Index 2X Leveraged ETN FNGO (up 55.3%) are the gainers in this field.

China Internet

China Internet Bull 2X ETF (CWEB - Free Report) (up 46.9%) is another tech winner of the year as it gives exposure to Chinese versions of stay-at-home stocks ranging from e-commerce, search engines, providers of IT services and educational content.

U.S. Treasury

This segment won on safe-haven sentiments and a sharp decline in long-term U.S. treasury bond yields. Winners of the area were Daily 20+ Year Treasury Bull 3X (TMF - Free Report) (up 53.5%) and ProShares Ultra 20+ Year Treasury UBT) (up 39.3%). 

Gold

A super-dovish Fed and the resultant decline in the strength of the greenback, fears of prolonged global recession, low oil prices, strong safe-haven demand amid bear market rallies booted gold bullion. ETFs like VelocityShares 3x Long Gold ETN (up 36.0%) and DB Gold Double Long ETN (DGP - Free Report) (up 29.6%) stood strong in the first half.

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