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5 Leveraged Europe ETFs to Watch on Greece Deal - ETF News And Commentary

Sweta Killa

After the month-long Greek drama, the European stock market seems to be settling down. This is especially true as the Euro zone leaders agreed to negotiate on a bailout loan for Greece, provided Athens implements tough reforms. The move averts the country from bankruptcy and dismissal from the Euro zone.


Inside the Deal


Prime minister Alexis Tsipras has no choice but to agree with the harsh austerity measures demanded by the Euro zone in return for the loans. These include streamlining pensions, boosting tax revenues especially VAT, liberalizing the labor market with extended shop opening hours, privatizing the electricity network and introduction of “quasi-automatic” spending cuts if Greece deviates from primary surplus targets.


Apart from these, Greece has to raise €50 billion through privatization over the next three years, half of which will be used for the recapitalization of Greek banks. The rest will be split between the debt repayment and investment in the Greek economy (read: ETFs to Gain & Lose as Greece Crisis Deepens).


Greece must act on some of these reforms, including tax and pension, by July 15 to regain the faith of the Euro zone leaders. If this happens, Greece would grant a bailout package of up to €86 billion ($96 billion) over the next three years. The deal, awaiting approval from the Greek parliament, will be the country's third bailout in five years.


ETFs to Watch


The market cheered a conditional agreement aimed at keeping Greece afloat and securing its place in the Euro zone for the future. The Stoxx Europe 600 index surged almost 2% on Monday, bringing back the appeal for the European equities and the related ETFs.


Given this, many investors might have turned bullish now and may want to consider going long on the country. For them, a leveraged play on the European markets could be an excellent idea especially after the Greece deal and the cheap money already flowing into the economy. Notably, leveraged ETFs could lead to huge gains in a very short time frame when compared to the simple products (see: all Leveraged Equity ETFs here).


Below we have highlighted five leveraged ETFs for investors who are bullish on Europe right now:


ProShares Ultra FTSE Europe ETF (UPV)


This fund seeks to deliver two times (2x or 200%) exposure to the daily performance of the FTSE Developed Europe Index. The benchmark measures the performance of the 515 large and mid cap securities of the 16 developed market countries: Austria, Belgium/Luxembourg, Denmark, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom.


The fund has amassed $36.2 million and trades in a light volume of less than 16,000 shares per day. It charges 95 bps in fees per year and has lost 4.6% in the trailing one-month period.


Direxion Daily FTSE Europe Bull 3x Shares (EURL)


This ETF seeks to deliver three times (3x or 300%) the daily performance of the FTSE Developed Europe Index. The product has AUM of $73.5 million and charges 95 bps in fees and expenses. It trades in moderate volumes of nearly 89,000 shares per day and is down 5.8% in the trailing one-month period (read: 3 European ETFs Leading the Market Higher).


Barclays ETN+ FI Enhanced Europe 50 ETN (FEEU)


This is an ETN option providing leveraged exposure of two times the performance of the Stoxx Europe 50 USD Gross Return Index. The benchmark comprises 50 European blue-chip companies selected from within the Stoxx Europe 600 Index. The note has been able to manage assets of $966.8 million but trades in a light volume of 6,000 shares a day. It charges 29 bps in annual fees from investors and has lost 2.2% over the past one month.


Credit Suisse FI Enhanced Europe 50 ETN (FIEU)


Like Barclays ETN, FIEU also provides two times leveraged exposure to the performance of the Stoxx Europe 50 USD Gross Return Index. It has $289 million in AUM and trades in volume of less than 15,000 shares a day. Expense ratio came in at 0.60%. The ETN is down 2.44% over the past one month.


Direxion Daily MSCI Europe Currency Hedged Bull 2x Shares (HEGE)


This fund debuted on the market last month and has amassed $4.1 million in its asset base so far. It seeks to deliver twice the daily performance of the MSCI Europe US Dollar Hedged Index, which provides exposure to the European equity market and hedges the euro to the U.S. dollar. The product trades in average daily volume of under 2,000 shares and charges 95 bps in annual fees. It has lost 1% since its debut.


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 (read: 10-Minute Guide to 10 Most Popular Leveraged ETFs).


Still, for ETF investors who are bullish on the European equity market for the near term, either of the above products could make 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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PRO-ULT EUROPE (UPV): ETF Research Reports
 
DIR-D EUR3XBL (EURL): ETF Research Reports
 
FI ENHNC EU 50 (FEEU): ETF Research Reports
 
CS-FI ENH EUR50 (FIEU): ETF Research Reports
 
DIR-D EC H BL2X (HEGE): ETF Research Reports
 
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