Leveraged ETF Round Up: Gold Miners & Energy Advance

Zacks

Things were no different last week for the leveraged ETF field as the winners and losers were pretty similar to the spaces of the prior week.  Bull ETFs on gold miners and energy remained the top picks.

Let’s take a look at some top and worst performing leveraged/inverse ETFs last week to check the leaders and laggards in the market now (read: Leveraged ETF Round Up: Gold Miners Gain, India Erodes).

Top Performers Return Last Week
Daily Gold Miners Bull 3x Shares (NUGT) 22.08%
Daily Junior Gold Miners Index Bull 3x Shares (JNUG) 13.03%
Daily Energy Bull 3X Shares (ERX) 9.32%
Direxion Daily Japan Bull 3X Shares (JPNL) 9.29%
Worst Performers Return Last Week
Daily Gold Miners Bear 3x Shares (DUST) -20.86%
Daily Energy Bear 3X Shares (ERY) -8.86%
Daily Natural Gas Related Bear 3x Shares (GASX) -7.30%
Daily Small Cap Bear 3X Shares (TZA) -6.64%
 
Gold Miners ETFs in Focus

Thanks to the unrest in Iraq, the gold bullion has climbed more than 5% so far this year buoyed by its safe haven status. As a result, gold miners ETFs – often trading as a leveraged play on gold the commodity as well – has been surging higher lately. NUGT and JUNG took the top two spots in the leveraged ETFs winner's list last week.  

Both products offer thrice the daily exposure to their respective index which consists of companies mainly involved in gold mining activity. Alternatively, DUST – a triple leverage inverse gold mining ETF – lost the most (read: A Comprehensive Guide to Gold Mining ETFs).

Energy ETFs in Focus

Uprising in oil-rich Iraq stirred the worries over a supply disruption and pushed up the oil prices. This in turn resulted in a price rise in overall energy space.

Also, Russia discontinued gas supply to Ukraine in an argument over bills that could disturb supplies to mainland Europe as well. All these issues made ERX – a bull ETF on energy following triple leverage strategy – the third best performer last week.

ERX looks to follow the Energy Select Sector Index.  For the same reason, ERY – the bear ETF on energy offering three times inverse exposure to the same Energy Select Sector Index – lost about 8.86% last week(read: 3 Energy ETFs to Watch on Iraq Turmoil).

 In fact, crisis in the energy space brightened up the natural gas ETFs as well in the recent times. GASX – offering three times inverse exposure to the ISE-REVERE Natural Gas Index –shed about 7.30%.

Japan ETF in Focus

The Japanese economy – which had stalled on account of the disaster caused by an earthquake and tsunami in March 2011 as well as a stretched deflationary rut –waited long for a turnaround and got a boost in 2013.

This came on the back of Prime Minister Shinzo’s continuous attempt to control deflation and weaken the yen. Super-easy monetary policy resulted in depreciation of the yen which in turn worked in favor of an export oriented economy like Japan.

Japan’s annualized Q1 GDP of 6.7% bettered analysts’ expectations thanks to a rise in business activity. Per Bloomberg, consumer confidence picked up in May for the first time in six months. As a result, JPNL which offers triple the leverage on the MSCI Daily TR Net Japan USD Index also generated solid returns last week.

U.S. Small Caps in Focus

After a cold snap, the U.S. market started to pick up in the second quarter. If the better job, manufacturing and consumer confidence data were not enough, the Fed’s dovish comment on interest rate policy in the latest meeting charged up the U.S. market all over again.

The Fed’s intention to keep the rates low for longer revived stock market activity. Though the Fed tweaked its target interest rates for 2015 and 2016 a bit more than expected, the long-term rate forecast is now down to 3.75% from about 4%.

Thus, with triple the negative focus on small-cap stocks of the U.S. market and following the Russell 2000 Index, TZA retreated substantially last week (read: Top Ranked Small Cap Value ETF in Focus: SLYV).

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Read the analyst report on NUGT

Read the analyst report on DUST

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