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Leveraged ETF Round Up: Gold Miners Gain, India Erodes

Zacks Equity Research

Last week, the leveraged/inverse ETF world was mostly influenced by the tension in Iraq as well as recovery in the U.S. economy. ETFs which gained and lost the most last week had co-relation with these two events. Let’s take a look at some top and worst performing leveraged/inverse ETFs to check the top and worst players in the market right now:

Top Performers Return Last Week
Daily Junior Gold Miners Index Bull 3x Shares (JNUG) 35.62%
Daily Gold Miners Bull 3x Shares (NUGT) 19.95%
Daily Natural Gas Related Bull 3x Shares (GASL) 7.51%
Ultra Semiconductors (USD) 7.32%
Worst Performers Return Last Week
Daily Gold Miners Bear 3x Shares (DUST) -18.08%
Daily India Bull 2x Shares (INDL) -12.34%
UltraShort Russell2000 Value (SJH) -11.84%
UltraShort Russell MidCap Value (SJL) -7.61%

Gold Miners ETFs in Focus

Gold Miners ETFs – often trading as leveraged play on gold the commodity as well – have seen a volatile ride this year sometimes gaining strength on some downbeat U.S. economic data and geopolitical tension and sometimes falling on the strength in the greenback due to the Fed’s QE taper. However, of late, worries over civil war in Iraq have turned investor attention toward gold plays.

This Iraq turmoil has sapped the demand for risky assets and bolstered the need to invest in safe havens like gold. As a result, JUNG and NUGT have taken the top two spots in the leveraged ETFs scoreboard last week.  

Both products give thrice the daily exposure to their respective index which consists of companies mainly involved in gold mining activity. On the other hand, DUST – a triple leverage inverse gold mining ETF – shed the most (read: After a Rocky Q1, What's Ahead for Gold Mining ETFs?).

Natural Gas ETF in Focus  

Natural gas ETFs also had a nice spell last week thanks to the militant attacks in Iraq. Issues in this energy-rich nation spurred the apprehension of supply disruption in energy which puts gas back in the U.S. in focus.

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

Semiconductor ETF in Focus

Recently, the semiconductors space has seen some light at the end of the tunnel as the market-research firm IDC nudged up its view on global PC shipments for 2014. The research firm projects global shipments to decline 6% this year against the 6.1% decline projected in March. This projection spread cheer among investors as companies like Intel should benefit of this trend.

The space has actually seen an elongated phase of downturn which kept it undervalued. Now, with some rays of hope falling on this investing corner, semiconductors ETFs went on an uphill ride. USD which offers double the leverage on the Dow Jones U.S. Semiconductors Index also generated solid returns last week (read: Intel Looks to Fuel Rally in These ETFs).

India ETF in Focus

After flying high, India ETFs again started to fall. Overvaluation concerns, rising inflation and Iraq tension pose threats to India ETFs. India imports the majority of its oil requirements. Now with soaring oil prices, concerns over currency depreciation and current account deficit will likely be back in focus.  To reflect the sudden dip in sentiment, INDL – the bull ETF on India with three-times exposure – lost about 12.3% last week (read: India ETFs: Can the Surge Continue after Elections?).

U.S. Market in Focus

Optimism, though fragile, again returned to the U.S. market. Spring brought in more jobs along with better housing and manufacturing data in the country. Thus, SJH and SJL, having double the negative focus on small-cap and mid-cap value stocks of the U.S. market, retreated substantially last week (read: Will Large Cap ETFs Continue to Surge?). 

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