Top 10 Most Traded Leveraged ETFs (DWT, UWT)

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Leveraged exchange-traded funds (ETFs) use the futures markets to magnify the returns of a specific index. Leveraged exchange-traded funds (ETFs) either look to double or triple the daily return of an index, or return the opposite of an index.

The first ETF, the State Street SPDR Standard & Poor’s 500 ETF, was launched in 1993. Since then, the industry has rapidly expanded with ETFs accounting for over $4 trillion in assets. The first leveraged ETFs didn’t appear until 2006. Although these products only occupy a small space in the entire ETF universe, their popularity has grown due to the possibility of higher returns in a very short period of time (provided that trends remain favorable). In 2019, ProShares and Direxion are leading the leveraged ETF space. The majority of the most popular products are coming from these issuers.

Better suited to short-term trading opportunities, leveraged ETFs usually don’t make an appropriate long-term investment strategy due to the expensive cost structure that comes with the high level of trading needed to maintain the fund’s positions. Many popular leveraged ETFs have expense ratios of 0.95%.

Leveraged ETFs can be highly volatile and the risk of principal loss with these funds is significant. Regardless, the top ten most traded leveraged ETFs all trade millions of shares daily.

1. VelocityShares 3x Inverse Crude Oil ETN ETF

Leveraged Factor: 3x
Benchmark Index: S&P GSCI® Crude Oil ER

The VelocityShares 3x Inverse Crude Oil ETN ETF (DWT) seeks to replicate, net of expenses, three times the inverse of the S&P GSCI® Crude Oil Index ER.

Instability in the global oil market led to a jump in oil prices and an increased interest in leveraged ETFs for short-term trading opportunities. However, as of December 2019, one-month total returns are down -3.28%, three-month total returns are down -28.59% and year to date (December 3, 2019), total returns are down -70.39% for this ETF.

This ETF trades approximately 25 million shares daily.

2. Direxion Daily Gold Miners Bear 3x Shares ETF

Leveraged Factor: 3x
Benchmark Index: NYSEARCA Gold Miners

The Direxion Daily Gold Miners Bear 3x Shares ETF (DUST) seeks to return triple the inverse of the daily performance of the NYSEARCA Gold Miners Index.

Gold has many physical properties that make it desirable (durability, malleability, conducts heat and electricity), in addition to being used industrially, in jewelry and as currency. For these reasons, it is one of the most popular precious metals for investment purposes, which makes this ETF in-demand among traders. Silver In November 2019, it was trading an average volume of 18.7 million shares per day.

This ETF trades approximately 17 million shares per day.

3. ProShares UltraPro QQQ ETF

Leveraged Factor: 3x
Benchmark Index: NASDAQ-100 Index

The ProShares UltraPro Short QQQ ETF (TQQQ) offers three times daily long leverage to the NASDAQ-100 Index. This ETF uses a modified market index, looking to target the largest NASDAQ-traded securities, but it also excludes financial stocks. Since the NASDAQ 100 is dominated by technology companies, the performance of this ETF is largely dictated by the performance of the technology industry.

This ETF trades approximately 15 million shares daily.

4. UVXY

5. ProShares UltraPro Short QQQ ETF

Leveraged Factor: 3x
Benchmark Index: NASDAQ-100

The ProShares UltraPro Short QQQ ETF (SQQQ) provides three times inverse exposure to a modified market-cap-weighted index of 100 of the largest non-financial issues listed on the NASDAQ. Like the ProShares UltraPro QQQ, the performance of this ETF is largely dictated by the performance of the technology industry which dominates the NASDAQ-100 index.

This ETF trades approximately 13 million shares daily.

6. Direxion Daily Gold Miners Bull 3x Shares ETF

Leveraged Factor: 3x
Benchmark Index: NYSE Arca Gold Miners

The Direxion Daily Gold Miners Bull 3x Shares ETF (NUGT) provides three times leveraged exposure to a market-cap-weighted index of global gold and silver mining firms. DUST (position number three in this list) and NUGT are by far the two most heavily traded gold ETFs.

This ETF trades approximately 10 million shares daily.

7. Direxion Daily S&P 500 Bear 3x Shares ETF

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

The Direxion Daily S&P 500 Bear 3x Shares ETF (SPXS) seeks to provide three times inverse exposure to a market-cap-weighted index of 500 of the largest and most liquid U.S. companies. This ETF is an aggressive bet against the S&P 500.

This ETF trades approximately 6 million shares daily.

8. Direxion Daily Junior Gold Miners Index Bear 3x Shares ETF

Leveraged Factor: 3x
Benchmark Index: Market Vectors Junior Gold Miners

The Direxion Daily Junior Gold Miners Index Bear 3x Shares (JDST) ETF provides daily -3x exposure to an index of junior gold and silver mining companies from developed as well as emerging markets. Overall, these firms tend to be volatile.

This ETF trades approximately 6 million shares daily.

9. ProShares Ultra Short S&P 500 ETF

Leveraged Factor: 2x
Benchmark Index: S&P 500

The ProShares Ultra Short S&P 500 (SDS) ETF provides two times inverse exposure to a market-cap-weighted index of 500 large- and mid-cap US firms selected by the S&P Committee. In 2019, this ETF is providing the high liquidity that is the best-case scenario for a geared fund.

This ETF trades approximately 6 million shares daily.

10. ProShares UltraPro Short S&P 500 ETF

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

The ProShares UltraPro Short S&P500 ETF (SPXU) seeks the daily return of three times the inverse of the S&P 500. provides -3x exposure to a market-cap weighted index of 500 of the largest and most liquid US companies. In 2019, this ETF is providing the high liquidity that is the best-case scenario for a geared fund.

This ETF trades approximately 5 million shares daily.

Source: Investopedia

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