10 Leveraged/Inverse ETFs With Over 30% Surge In November

After a rowdy ride in the initial days of November, the U.S. stocks have been on the upward journey since the Election Day. The key catalysts were the Trump effect, hopes of a rate hike in December, an upbeat holiday season, and return to earnings growth. Renewed expectation of a cut in production by the Organization of the Petroleum Exporting Countries (OPEC) added to the strength with a jump in oil price and energy stocks (read: Oil ETFs Jump on Renewed Hopes of OPEC Cut).

Trump’s strong pledge to boost fiscal stimulus and his inflationary policies would prompt the Fed to hike rates in December and expedite lift-offs in 2017 and 2018. While equities saw increased inflows post Trump’s win, the bond market tanked wiping out more than trillions of dollars.

This has resulted in huge demand for leveraged or inverse ETFs as investors seek to register big gains in a short span. These products create either a leveraged long/short position, an inverse long/short position or a leveraged inverse long/short position in the underlying index by employing various investment strategies such as swaps, options, future contracts and other financial instruments. Due to their compounding effect, investors can enjoy higher returns in a very short period of time provided the trend remains a friend.

Below we have highlighted 10 ETFs that crushed the market in November with abnormal returns piled up in a short period. Moreover, these funds will continue to be investors’ darlings moving into the final month of 2016.

Direxion Daily Regional Banks Bull 3x Shares DPST

This ETF targets the regional bank corner of the U.S. financial sector with a leveraged factor.

Leveraged Factor: 3x
Inverse: No
Benchmark Index: Solactive Regional Bank Index
AUM: $5.4 million
Returns: 60.4%

Direxion Daily Junior Gold Miners Index Bear 3x Shares JDST

This fund offers inverse exposure to the largest and most liquid small-cap companies that derive at least 50% revenue from gold or silver mining.

Leveraged Factor: 3x
Inverse: Yes
Benchmark Index: MVIS Global Junior Gold Miners Index
AUM: $81.3 million
Returns: 47.7%

Direxion Daily Gold Miners Index Bear 3x Shares (ST:DUST)

This fund also offers inverse exposure to the companies that operate globally in both developed and emerging markets, and are involved primarily in the mining for gold and silver.

Leveraged Factor: 3x
Inverse: Yes
Benchmark Index: NYSE Arca Gold Miners Index
AUM: $222.8 million
Returns: 46.1%

Direxion Daily Small Cap Bull 3x Shares (HN:TNA)

This product targets the small cap segment of the broad U.S. equity market.

Leveraged Factor: 3x
Inverse: No
Benchmark Index: Russell 2000 Index
AUM: $645.7 million
Returns: 42.8%

ProShares UltraPro Russell2000 URTY

This fund also targets the small cap segment (read: 6 ETFs to Play Small-Cap Surge for Big Gains).

Leveraged Factor: 3x
Inverse: No
Benchmark Index: Russell 2000 Index
AUM: $122.3 million
Returns: 42.6%

ProShares UltraPro Financial Select Sector FINU

This product offers leveraged exposure to the broad financial sector.

Leveraged Factor: 3x
Inverse: No
Benchmark Index: S&P Financial Select Sector Index
AUM: $10.9 million
Returns: 41.8%

ProShares Ultra S&P Regional Banking (WA:KRU)

Like DPST, this ETF targets the regional bank corner of the U.S. financial sector but with lower risk.

Leveraged Factor: 2x
Inverse: No
Benchmark Index: S&P Regional Banks Select Industry Index
AUM: $6.9 million
Returns: 39.2%

Direxion Daily S&P Biotech Bull 3x Shares LABU

This fund creates a leveraged play on biotech stocks.

Leveraged Factor: 3x
Inverse: No
Benchmark Index: S&P Biotechnology Select Industry Index
AUM: $273.3 million
Returns: 38.4%

iPath US Treasury 10-Year Bear ETN DTYS

This ETN targets the inverse moves in the long yield curve of the Treasury market (read: Trump Win Sparks Sell-Off in Bonds: Short with These ETFs).

Leveraged Factor: No
Inverse: Yes
Benchmark Index: Barclays (LON:BARC) 10Y US Treasury Futures Targeted Exposure Index
AUM: $55.3 million
Returns: 35.3%

Direxion Daily Mid Cap Bull 3x Shares (BO:MIDU)

This fund targets the mid cap segment of the broad equity market and carries a higher level of risk (read: Bull Market Here to Stay: 10 ETF Ways to Play).

Leveraged Factor: 3x
Inverse: No
Benchmark Index: S&P MidCap 400 Index
AUM: $53.1 million
Returns: 30.3%

Bottom Line

While the strategy is highly beneficial for short-term traders, it could lead to huge losses compared with traditional funds in fluctuating or seesaw markets. Further, their performances could vary significantly from the actual performance of their underlying index over a longer period when compared to the shorter period (such as, weeks or months) due to their compounding effect (see: all Leveraged Equity ETFs here).

Still, for ETF investors who are bullish on equities and bearish on bond for the near term, either of the above products could make an interesting choice. Clearly, this could be intriguing for those with high-risk tolerance, and a belief that the “trend is the friend” in this specific corner of the investing world.

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DIRX-SC BULL 3X (TNA): ETF Research Reports

DIRX-D SP BBULL (LABU): ETF Research Reports

PRO-ULT 3X FINL (FINU): ETF Research Reports

DIRX-MC BULL 3X (MIDU): ETF Research Reports

PRO-ULT R2000 (URTY): ETF Research Reports

DIR-D RG BK BL3 (DPST): ETF Research Reports

IPATH-UST 10YBR (DTYS): ETF Research Reports

DIR-D GM BR 3X (DUST): ETF Research Reports

DIR-DJGMI BR 3X (JDST): ETF Research Reports

PRO-ULT SP RB (KRU): ETF Research Reports

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