Last week, the leveraged/inverse ETF world was pretty quiet with the highest gain seen at only just below 6% -- very rare in this ‘high risk, high return’ investing zone. The Fed’s new comments on the interest rate policy mainly regulated the events in the market and kept wild swings to a minimum.
Let’s take a look at some top and worst performing leveraged/inverse ETFs to assess what is trending now in the market.
|Top Performers||Return Last Week|
|E-TRACS 2x Leveraged Long Alerian MLP Infrastructure Index (MLPL)||5.76%|
|Daily Natural Gas Related Bear 3x Shares (GASX)||5.47%|
|E-TRACS 2xLeveraged Long Wells Fargo Business Development Company ETN (BDCL)||4.81%|
|Worst Performers||Return Last Week|
|Daily Junior Gold Miners Index Bull 3x Shares (JNUG)||-7.11%|
|Daily Natural Gas Related Bull 3x Shares (GASL)||-6.71%|
|Daily Russia Bear 3x Shares (RUSS)||-3.59%|
MLP ETFs in Focus
MLPs represent a compelling investment proposition for income-focused investors while being known for stable cash flows and strong growth potential. As a result, the space benefitted from the dip in interest rates past week. MLPL offers twice the exposure on the Alerian MLP Infrastructure Index and it gained about 5.76% (read: 3 MLP ETFs Riding Out Market Volatility).
Natural Gas ETFs in Focus
Prices of natural gas moved south in the recent past due to stronger inventories. Supplies kept on mounting for last seven weeks in a row leading prices to tumble last week. GASX -- a three times bear fund on ISE-REVERE Natural Gas Index – thus, was the second best performer. On the other hand, GASL – a triple leverage bull ETF on natural gas – shed 6.71% (read: Natural Gas ETFs Tumble as Supply Levels Surge).
Business Development ETFs in Focus
In an ultra-low yield environment, Business Development Companies or BDCs also remained great investment propositions thanks to their high-yield nature. BDCL – having twice leveraged long exposure on the Wells Fargo Business Development Company Index – added 4.81%.
Gold Miners ETFs in Focus
Gold Miners ETFs – often trading as a leveraged play on gold –slid last week as the Fed recently hinted at the rise in interest rates earlier than expected. The announcement hurt the safe haven status of the metal.
While gold bullion was hurt considerably, the pain was more intense in the mining ETFs space. As a result, JUNG – the bull gold mining ETF having triple leverage strategy was the top loser in the leveraged ETFs world last week (read: After a Rocky Q1, What's Ahead for Gold Mining ETFs?).
Russia ETFs in Focus
Optimism, though fragile, again returned to the Russian market. So far, the nation hit headlines for all wrong reasons like annexation in Crimea, tension with Ukraine, stand-off with the West and credit rating downgrade by big rating agencies.
However, tensions subsided lately after the Russian president Vladimir Putin urged a cessation in the use of military force against Ukraine. The Russian stock market soared to a five-month high on the news (read: Russia ETFs in Focus on Credit Downgrade, Rate Hike).
Thus, RUSS, having three times the negative focus on the DAXglobal Russia Index, retreated about 3.59% last week.
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