These Are The Top 7 Underperform Calls On ETFs (SDS, FAS, SKF, FAZ, QID, TNA, BGU)

“Jumping into a stock because your rich neighbor did, or because you heard about it from your friend’s uncle who used to work on Wall Street, or because CNBC has been talking about it nonstop is a recipe for disaster. If there’s one thing I’ve learned as a stock analyst, it’s that any stock can be gussied up to sound like a world-beater. If there’s a second thing I’ve learned, it’s that being a smart person doesn’t make you a good investor. In the hands of a smart person with good communication skills, the never-were and never-will-be stocks sound like tickets to instant fortune. The ancient Greek philosophers made the distinction between rhetoric and knowledge. The former is convincing; the latter is true,” Anand Chokkavelu Reports From The Motley Fool.

Chokkavelu goes on to say, “That’s why we factor in the track record in our Motley Fool CAPS community. We invite everyone to give stocks an outperform (akin to a “buy” call) or underperform rating (akin to a “sell” call) in CAPS. We then use those opinions to calculate a rating for each stock — from one to five stars (five being the best). But — and this is a big distinction — we give more weight to the opinions of folks whose picks have performed well in the past.”

Company Name
 Net Assets (in millions) 52-Week Price Change CAPS Rating (out of 5) Underperform Picks
ProShares UltraShort S&P500 (NYSE:SDS)      $3,734 -20% * 503
Direxion Daily Financial Bull 3X Shares (NYSE:FAS)      $1,871 -77% * 477
ProShares UltraShort Financials (NYSE:SKF)       $612 -15% * 446
Direxion Daily Financial Bear 3X Shares (NYSE:FAZ)       $972 -29% * 441
ProShares UltraShort QQQ (NYSE:QID)      $1,065 -27% * 428
Direxion Daily Small Cap Bull 3X Shares (NYSE:TNA)       $559 -10% * 370
Direxion Daily Large Cap Bull 3X Shares (NYSE:BGU)       $212 -9% * 366

Source: Motley Fool CAPS.

“So, with that methodology as prelude, I present to you the seven one- and two-star ETFs with the most CAPS community member underperform ratings (I used minimum net assets of $100 million). Remember, stocks are rated on a five-star scale by our CAPS community, so one- and two-star stocks are consensus underperforms. Each of the underperforms above are leveraged ETFs meant to amplify the daily returns in the underlying index by two to three times. You may be a little confused that both the bullish and the bearish ETFs lost money over the past year. Remember that these ETFs are meant to track the daily movements of the indexes, not the long-term performance,” Chokkavelu Reports.

Take a look at our individual categories for each ETF for more details and great content.  We have put together some more details on each ETF below along with the link to each ETF’s category.

UltraShort S&P500 ProShares (NYSE:SDS)  Visit Our (SDS) Category: HERE

The investment seeks daily investment results, before fees and expenses, which correspond to twice the inverse of the daily performance of the S&P 500 index. The fund normally invests 80% of assets in financial instruments with economic characteristics that should be inverse to those of the index. It may employ leveraged investment techniques in seeking its investment objective. The fund is nondiversified.

UltraShort QQQ ProShares (NYSE:QID)  Visit Our (QID) Category: HERE

The investment seeks daily investment results, before fees and expenses, which correspond to twice the inverse of the daily performance of the NASDAQ-100 index. The fund normally invests 80% of assets in financial instruments with economic characteristics that should be inverse to those of the index. It may employ leveraged investment techniques in seeking its investment objective. The fund is nondiversified.

Direxion Shares ETF Trust Financial Bull 3x (NYSE:FAS)  Visit Our (FAS) Category: HERE

The investment seeks to replicate, net of expenses, 300% of the daily performance of the Russell 1000 Financial Services Index The fund will invest at least 80% of assets in securities that comprise the index. It will also utilize financial instruments that, in combination, provide leveraged and unleveraged exposure to the index. The fund is nondiversified.

Direxion Shares ETF Trust Small Cap Bull 3x (NYSE:TNA)  Visit Our (TNA) Category: HERE

The investment seeks to replicate, net of expenses, 300% of the daily performance of the Russell 2000 Index The fund will invest at least 80% of assets in securities that comprise the index. It will also utilize financial instruments that, in combination, provide leveraged and unleveraged exposure to the index. The fund is nondiversified.

Direxion Shares ETF Trust Financial Bear 3x (NYSE:FAZ)  Visit Our (FAZ) Category: HERE

The investment seeks to replicate, net of expenses, 300% of the inverse daily performance of the Russell 1000 Financial Services Index The fund will invest at least 80% of assets in securities that comprise the index. It will also utilize financial instruments that, in combination, provide leveraged and unleveraged exposure to the index. The fund is nondiversified.

ProShares UltraShort Financials (NYSE: SKF)  Visit Our (SKF) Category: HERE

The investment seeks daily investment results, before fees and expenses, which correspond to twice the inverse of the daily performance of the Dow Jones U.S. Financials index. The fund invests in derivatives that advisors believes should have similar daily return characteristics as twice (200%) the inverse of the daily performance of the Index. It invests typically the rest of the assets in money market instruments. The fund is nondiversified.

Direxion Daily Large Cap Bull 3X Shares (NYSE:BGU)  Visit Our (BGU) Category: HERE

The fund seeks daily investment results, before fees and expenses, of 300% of the performance of the Russell 1000 index. The fund will invest at least 80% of assets in securities that comprise the index. It will also utilize financial instruments that, in combination, provide leveraged and unleveraged exposure to the index. The fund is nondiversified.

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