5 Top-Performing Leveraged ETFs of March
The U.S. stock market is on track for its fifth consecutive month of gains, with the major bourses reaching a new all-time high last week. The S&P 500 crossed the milestone of 5,200 for the first time ever, while the Dow Jones is nearing a 40,000 threshold for the first time in 128 years. With just two trading days left, the S&P 500 is up more than 2% in March, while the Dow and the Nasdaq gained 1.4% and 0.7%, respectively.
Here, we highlight a bunch of the best-performing leveraged equity ETFs from different corners of the market that are leaders in their segments. These include 2x Bitcoin Strategy ETF BITX, MicroSectors Gold Miners 3X Leveraged ETN GDXU, MicroSectors U.S. Big Oil Index 3X Leveraged ETN NRGU, MAX Auto Industry 3X Leveraged ETN CARU and MicroSectors U.S. Big Banks Index 3X Leveraged ETN BNKU. These funds will continue to be investors’ darlings, at least in the near term, provided the sentiments remain bullish.
Last week’s rally was propelled by the Fed’s signal to cut interest rates. This will mark the end of the most aggressive Fed hiking cycle and fuel corporate profits. In its latest meeting, Fed Chair Jerome Powell maintained interest rates steady in the range of 5.25%-5.50% and signaled three rate cuts this year, citing expanding economic activity and easing but elevated inflation (read: ETFs in Focus With Fed Rate Cuts in the Cards).
This shift in its monetary policy approach aims to support a stable economic environment without triggering a recession or a significant rise in unemployment. Lower interest rates generally lead to reduced borrowing costs, which help businesses expand their operations more easily, resulting in increased profitability. This, in turn, stimulates economic growth and thus provides a boost to the stock market.
Leveraged ETFs
Leveraged ETFs provide multiple exposures (2X or 3X) to the daily performance of the underlying index. These funds employ various investment strategies, such as the use of swaps, futures contracts and other derivative instruments to accomplish their objectives. Due to their compounding effect, investors can enjoy higher returns in a short period, provided the trend remains a friend.
Since most of these ETFs seek to attain their goals on a daily basis, their performances could vary significantly from the performance of their underlying index or benchmark over a longer period compared with a shorter period (such as weeks, months or years) due to their compounding effect (see: all Leveraged Equity ETFs here).
Investors should also note that leveraged ETFs involve more risk than traditional funds. They are often more costly and can be less tax-efficient, as they can see capital gains through the use of swaps and other derivative instruments.
2x Bitcoin Strategy ETF (BITX) – Up 65%
2x Bitcoin Strategy ETF is a leveraged Bitcoin-linked ETF that seeks to provide daily investment results that correspond generally to twice the performance of the S&P CME Bitcoin Futures Daily Roll Index. It has AUM of $1.2 billion and an expense ratio of 1.85%. 2x Bitcoin Strategy ETF trades in average daily volume of 3 million shares.
MicroSectors Gold Miners 3X Leveraged ETN (GDXU) – Up 34.3%
MicroSectors Gold Miners 3X Leveraged ETN seeks to deliver three times the performance of the S-Network MicroSectors Gold Miners Index. It has amassed $234.7 million in its asset base and charges 95 bps in annual fees. MicroSectors Gold Miners 3X Leveraged ETN trades in an average daily volume of 1.2 million shares (read: 3 Reasons to Play Gold ETFs Now).
MicroSectors U.S. Big Oil Index 3X Leveraged ETN (NRGU) – Up 29.1%
MicroSectors U.S. Big Oil Index 3X Leveraged ETN provides three times leveraged exposure to the Solactive MicroSectors U.S. Big Oil Index, which is equal-dollar weighted and provides exposure to the 10 largest U.S. energy and oil companies. MicroSectors U.S. Big Oil Index 3X Leveraged ETN has been able to manage $2.2 billion in its asset base while trading in an average daily volume of 45,000 shares. Its expense ratio is 0.95% (read: Energy ETFs Hit New 52-Week High on Oil Price Surge).
MAX Auto Industry 3X Leveraged ETN (CARU) – Up 23.3%
MAX Auto Industry 3X Leveraged ETN is linked to a three-times leveraged participation in the daily performance of the Prime Auto Industry Index. It charges 95 bps in annual fees and has accumulated $3.3 million in its asset base since its inception in June 2023. MAX Auto Industry 3X Leveraged ETN trades under 500 shares a day on average.
MicroSectors U.S. Big Banks Index 3X Leveraged ETN (BNKU) – Up 20.2%
MicroSectors U.S. Big Banks Index 3X Leveraged ETN seeks to offer three times exposure to the Solactive MicroSectors U.S. Big Banks Index. It has accumulated $280.6 million in its asset base. MicroSectors U.S. Big Banks Index 3X Leveraged ETN charges 95 bps in annual fees and trades in an average daily volume of about 456,000 shares.
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MicroSectors U.S. Big Banks Index 3X Leveraged ETN (BNKU): ETF Research Reports
MicroSectors U.S. Big Oil Index 3X Leveraged ETN (NRGU): ETF Research Reports
MicroSectors Gold Miners 3X Leveraged ETNs (GDXU): ETF Research Reports
2x Bitcoin Strategy ETF (BITX): ETF Research Reports
MAX Auto Industry 3X Leveraged ETNs (CARU): ETF Research Reports
