A Quick Investor Guide To The Most Popular Leveraged ETFs [Direxion Daily Financial Bull 3X Shares, Direxion Daily Financial Bear 3X Shares]

ProShares Ultra Nasdaq Biotechnology ETF (NYSEARCA:BIB)

Leveraged Factor: 2x
Benchmark Index: NASDAQ Biotechnology Index

Since biotech has been on a tear this year, BIB makes for an excellent pick for investors seeking to make large profits from this space in a short span. The fund creates a double leveraged long position in the NASDAQ Biotechnology Index while charging 95 bps in fees a year. It has $917.5 million in its asset base and sees solid volume of 4.2 million shares a day in average. So far this year, the ETF has returned a whopping 42.3% to investors.

ProShares UltraPro S&P500 ETF (NYSEARCA:UPRO)

Leveraged Factor: 3x
Benchmark Index: S&P 500 Index

This product provides triple leveraged play to the S&P 500 index, charging 95 bps in fees and expenses. It has been able to manage $982 million in its asset base with daily trading volume of around 3 million shares. UPRO is up over 9% so far this year.

ProShares Ultra Financials ETF (NYSEARCA:UYG)

Leveraged Factor: 2x
Benchmark Index: Dow Jones U.S. Financials Index

This is another popular leveraged ETF in the financial space, having amassed $851 million in its asset base. UYG offers three times exposure to the daily performance of the Dow Jones U.S. Financials Index. The fund has added 5.5% so far in the year but the total cost is much higher than the expense ratio of 0.95%. This is primarily thanks to its moderate volume of under 86,000 shares a day which increases the total cost in the form of a wide bid/ask spread.

Daily Gold Miners Bull 3x shares (NYSEARCA:NUGT)

Leveraged Factor: 3x
Benchmark Index: NYSE Arca GoldMiners Index

This product seeks to deliver thrice the daily performance of the NYSE Arca Gold Miners Index, which consists of firms that operate globally in both developed and emerging markets, and are involved primarily in the exploration and production of gold. It is rich in AUM of $802 million and trades in heavy volume of nearly 18 million shares. Expense ratio comes in at 0.95%. The fund has delivered negative returns of 13% so far in the year thanks to the dulling appeal for gold and gold mining stocks.

VelocityShares 3x Long Crude Oil ETN (NYSEARCA:UWTI)

Leveraged Factor: 3x
Benchmark Index: S&P GSCI Crude Oil Index Excess Return

This is another popular leveraged fund targeting the energy segment of the commodity market through WTI crude oil futures contracts. It seeks to deliver thrice the returns of the S&P GSCI Crude Oil Index Excess Return and has attracted $788.5 million in its asset base. Though the fund charges a higher fee of 1.35% per year, its average daily volume is incredible exchanging about 54.4 million shares a day. UWTI is down about 28% so far this year but represents a solid opportunity when crude oil resumes its uptrend.

Bottom Line

Investors should note that ProShares has been the leader in the leveraged ETF space with most of the popular products coming from this issuer. These ETFs are not confined to one asset class or a specific sector but are spread out across various corners of the world. While equity-based products are gaining immense popularity, leveraged commodity ETFs are slowly gathering assets.

With a steadily increasing stock market and bullish outlook, these funds could pile up abnormal returns in a shorter period of time.

This article is brought to you courtesy of Sweta Killa.

Pages: 1 2

Leave a Reply

Your email address will not be published. Required fields are marked *