6 Top-Performing Leveraged ETFs of Last Week
The start of the year 2021 has been great for stocks globally with most of the indices enjoying a boom. An unprecedented fiscal and monetary stimulus across the globe, a coronavirus relief package worth $900 billion in the United States, Democrats’ control over Senate (indicating the chances of more fiscal aid) and most importantly the start of vaccination globally have acted as catalysts.
All these strengthened the hope for a faster-than-expected economic recovery. Key U.S. equity indexes hit all-time highs last week. All-world ETF iShares MSCI ACWI ETF ACWI was up 2.6% last week while the S&P 500, the Nasdaq -100 and the Dow Jones gained about 3.6%, 5.9% and 3.4%, respectively.
Against this backdrop, below we highlight a few winning leveraged ETFs of last week (read: 10 Best Performing Leveraged ETFs of 2020).
South Korea – South Korea Bull 3X Direxion (KORU) – Up 38.3%
South Korean stocks have been steady lately. The country’s exchange outperformed China’s and Japan’s in the first nine months of 2020. The country’s efficient handling of the coronavirus pandemic has also been a key driver of the market rally.
The underlying MSCI Korea 25-50 Index measures the performance of the large and mid-cap segments of the South Korea equity market, covering approximately 85% of the free float-adjusted market capitalization in South Korea.
Industrials – Breakwave Dry Bulk Shipping ETF (BDRY) – Up 34.3%
The pickup in global economic growth has supported the dry bulk shipping rates. Gradually rising demand across all vessel categories have probably been aiding the area and the related fund (read: Top & Flop Zones of 2020 and Their ETFs).
The underlying index of the fund Capesize 5TC Index, Panamax 4TC Index & Supramax 6TC measures rates for shipping dry bulk freight. It provides exposure to the dry bulk shipping market through a portfolio of near-dated freight futures contracts on dry bulk indices.
Energy – Microsectors U.S. Big Oil Index 3X ETN (NRGU) – Up 30.1%
Oil prices jumped on last week as tensions flared up following Iran's seizure of a South Korean vessel and Saudi gearing up to cut output in February. The South Korean government on Tuesday demanded the early release of an oil tanker which was seized by Iran's Islamic Revolution Guards Corps in the Gulf citing "repeated violations" of environmental protocol.
The move is deemed to have risen out of Seoul’s freezing of Iranian funds in Korean banks due to U.S. sanctions. Meanwhile, Saudi Arabia pledged incremental and voluntary oil output cuts of one million barrels per day (bpd) in February and March above its current quota — while OPEC’s allies will boost production (read: Oil & Energy ETFs Rallying on Output Cuts, Can the Rally Last?).
The underlying Solactive MicroSectors U.S. Big Oil Index is an equal-dollar weighted index that provides exposure to the 10 largest U.S. energy and oil companies. The note charges 95 bps in fees.
Banks – Regional Banks Bull 3X Direxion (DPST) – Up 30.1%
The fund follows the S&P Regional Banks Select Industry Index. Steepening yield curve, fiscal stimulus that strengthens the possibility of faster economic growth, vaccine rollout, financial strength of the banks and the Fed’s green signal to banks’ stock buyback boosted their shares last week.
Marijuana – Microsectors Cannabis 2X ETN (MJO) – Up 21.5%
Biden’s victory and Democratic power in the Congress could speed up the legalization of marijuana at the federal level, thereby providing a boost to the U.S. cannabis industry. Moreover, voters in Arizona, Montana, New Jersey and South Dakota recently voted in favor of adult use of cannabis, bringing the total number of states that have cleared it for that purpose to 15. The industry is also thriving with mergers and acquisitions. No wonder, MJO gained handsomely last week.
The note tracks the Indxx North American Cannabis Index, which includes North American stocks designed to track the performance of companies that provide products or services related to the medical or industrial use of cannabis or cannabis-related products.
Biotech – S&P Biotech Bull 3X Direxion (LABU) – Up 19.0%
The fund follows the S&P Biotechnology Select Industry Index. The expense ratio of the fund is 1.04% annually. Various researches on coronavirus vaccines, neuroscience and cancer drugs have kept the appeal of the biotech space alive.
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iShares MSCI ACWI ETF (ACWI): ETF Research Reports
Direxion Daily S&P Biotech Bull 3X Shares (LABU): ETF Research Reports
Direxion Daily Regional Banks Bull 3X Shares (DPST): ETF Research Reports
Direxion Daily MSCI South Korea Bull 3x Shares (KORU): ETF Research Reports
Breakwave Dry Bulk Shipping ETF (BDRY): ETF Research Reports
MicroSectors Cannabis 2X Leveraged ETNs (MJO): ETF Research Reports
MicroSectors U.S. Big Oil Index 3X Leveraged ETN (NRGU): ETF Research Reports
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