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5 Best Leveraged ETFs of November

Wall Street registered first back-to-back monthly gains since 2021, driven by signs of cooling consumer prices and hopes for a less hawkish Fed. The Dow Jones Industrial Average and the S&P 500 Index climbed 5.7% and 5.4%, respectively, while the tech-heavy Nasdaq Composite Index gained 4.4%.

This has resulted in huge demand for leveraged ETFs as investors sought to register big gains in a short span. We highlight a bunch of the best-performing leveraged equity ETFs from different corners of the market that gained more than 25% in November. These include MicroSectors Gold Miners 3X Leveraged ETN GDXU, Direxion Daily Semiconductor Bull 3x Shares SOXL, ETFMG Prime 2X Daily Junior Silver Miners ETF SILX, AdvisorShares MSOS 2x Daily ETF MSOX and Direxion Daily Transportation Bull 3X Shares TPOR. These funds will continue to be investors’ darlings, at least in the near term, provided the sentiments remain bullish.

Annual inflation slipped below 8% for the first time in eight months. The consumer price index rose 7.7% anually in October, after rising 8.2% at the end of September, while the core consumer price index, which strips out volatile components such as food and energy prices, climbed 6.3% year over year, down from 6.6% in September. The data renewed optimism in the stock market about the Fed‘s possibility of slowing its pace of interest-rate increases in 2023.

The latest comments from the Federal Reserve Chairman Jerome Powell signaled that smaller interest rate increases are likely ahead and could start in December. Traders expect the Fed to increase rates by 50 bps in December, with the rates peaking in June 2023.

Additionally, the holiday season started with a big bang despite concerns about inflation and higher prices that bolstered further optimism into the stock market to end November. Consumers spent a record $9.12 billion, up 2.3% year over year, on online shopping during Black Friday this year, according to Adobe.

Holiday spending is expected to be healthy despite inflationary challenges, with retail sales likely to grow 6-8% from the 2021 level during November and December to $942.6-$960.4 billion, per the National Retail Federation. Holiday online sales are forecast to increase 10-12% to $262.8-$267.6 billion, up from $238.9 billion in 2021 (read: 6 Hot ETF Deals for Cyber Monday).

The month’s rally came despite continued worries over lockdowns in China. The country is ramping up COVID restrictions after seeing case counts climbing in recent days.

We have profiled the ETFs in detail below:

MicroSectors Gold Miners 3X Leveraged ETN (GDXU) – Up 47.4%

MicroSectors Gold Miners 3X Leveraged ETN seeks to deliver three times (3X or 300%) the performance of the S-Network MicroSectors Gold Miners Index. It has amassed $91.5 million in its asset base since its debut last December and charges 95 bps in annual fees (read: Can Gold ETFs Rebound Ahead?).

MicroSectors Gold Miners 3X Leveraged ETN trades in an average daily volume of 444,000 shares.

Direxion Daily Semiconductor Bull 3x Shares (SOXL) – Up 45.5%

Direxion Daily Semiconductor Bull 3x Shares targets the semiconductor corner of the technology sector with three times leveraged exposure to the ICE Semiconductor Index. Direxion Daily Semiconductor Bull 3x Shares has amassed about $4.2 billion in its asset base, while charging 89 bps in fees per year.

Volume is good as it exchanges 120.7 million shares per day on average.

ETFMG Prime 2X Daily Junior Silver Miners ETF (SILX) – Up 30.5%

ETFMG Prime 2X Daily Junior Silver Miners ETF offers two times leveraged exposure to the silver mining exploration and production industry and follows the Prime Junior Silver Miners and Explorers Index.

ETFMG Prime 2X Daily Junior Silver Miners ETF has been able to manage $2.7 billion in its asset base, while trading in an average daily volume of 47,000 shares. The expense ratio comes in at 0.95%.

AdvisorShares MSOS 2x Daily ETF (MSOX) – Up 30.4%

AdvisorShares MSOS 2x Daily ETF is actively managed and designed for sophisticated investors looking to gain magnified exposure to the U.S. cannabis sector. It offers daily investment results that correspond to two times the daily performance of the AdvisorShares Pure US Cannabis ETF.

AdvisorShares MSOS 2x Daily ETF has accumulated $7.4 million in its asset base. It charges 95 bps in annual fees and trades in a volume of 48,000 shares a day on average.

Direxion Daily Transportation Bull 3X Shares (TPOR) – Up 27.5%

Direxion Daily Transportation Bull 3X Shares targets the transportation sector and seeks to deliver three times the daily performance of the Dow Jones Transportation Average Index (read: ETFs to Ride High With Busiest Thanksgiving Travel).

Direxion Daily Transportation Bull 3X Shares has AUM of $25.2 million and charges 95 bps in fees and expenses. It trades in modest volumes of about 33,000 shares per day.

Bottom Line

As a caveat, investors should note that these products are extremely volatile and suitable only for short-term traders. Additionally, the daily rebalancing — when combined with leverage — may make these products deviate significantly from the expected long-term performance figures (see: all the Leveraged Equity ETFs here).

Still, for ETF investors bullish on U.S. stocks for the near term, either of the above products can be an interesting choice. Clearly, a near-term long could be intriguing for those with high-risk tolerance and a belief that the trend is the friend in this corner of the investing world.

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Direxion Daily Semiconductor Bull 3X Shares (SOXL): ETF Research Reports

Direxion Daily Transportation Bull 3X Shares (TPOR): ETF Research Reports

MicroSectors Gold Miners 3X Leveraged ETNs (GDXU): ETF Research Reports

ETFMG Prime 2x Daily Junior Silver Miners ETF (SILX): ETF Research Reports

AdvisorShares MSOS 2x Daily ETF (MSOX): ETF Research Reports

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Zacks Investment Research