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Some Leveraged ETFs Gained Supporters in March


Although the S&P 500 gained just 1.4% last month, some investors wanted more and embraced leveraged exchange funds as avenues for generating additional returns.

“Two of March’s four top ETFs by money inflows were leveraged bets on a rising stock market,” reports Brendan Conway for Barron’s.

Those ETFs are the ProShares Ultra Russell2000 (UWM) , a double leveraged bet on the Russell 2000, and the ProShares Ultra S&P500 ETF (SSO) , which attempts to deliver twice the daily returns of the S&P 500. Combined, UWM and SSO brought in $3.3 billion last month, according to Barron’s.

That is another sign investors continue to embrace leveraged ETFs. Assets under management for global inverse and leveraged ETPs jumped to $61.3 billion at the end of February, a 3.7% increase from January and a 6% rise on a year-to-date basis, according to Boost ETP. Boost is a boutique provider of Europe-listed inverse and leveraged ETFs and the first European ETF provider to focus exclusively on inverse and leveraged products. [Inverse, Leveraged ETFs Hit Another Asset Record]

The crisis in Ukraine stoked increased activity in triple-leveraged Russia ETFs as the Direxion Daily Russia Bear 3x Shares (RUSS) and the Direxion Daily Russia Bull 3x Shares (RUSL) repeatedly saw higher volume and increased creation activity during March.[White House is a Bad Place for ETF Advice]

Still, it should be noted that ETF flows data does not always tell the entire. On the surface, it would appear that a surge in flows to UWM would jibe with investors being bullish on small-caps. But during March, investors pulled money from the Direxion Daily Small Cap Bull 3X Shares (TNA) while putting new money to work in the Direxion Daily Small Cap Bear 3X Shares (TZA) .

ProShares Ultra Russell2000

ETF Trends editorial team contributed to this piece.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.