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There’s a Leveraged Utilities ETF and It’s Soaring


There is no dearth of leveraged exchange traded funds on the market today, but some leveraged sector offerings can go unnoticed.

For as well-known as the Direxion Daily Gold Miners Bull 3X Shares (NUGT) and the UltraShort Financials ProShares (SKF) are and for as popular as the ProShares Ultrashort Nasdaq Biotechnology (BIS) has recently become, some leveraged sector ETFs toil in obscurity while delivering impressive returns. [Sudden Popularity for Inverse Biotech ETF]

That has been life for the ProShares Ultra Utilities (UPW) . It is not a stretch to say that given the utilities sector’s reputation for being a conservative, low beta hideout that investors may be surprised to learn an ETF like UPW even exists. There is also a bearish equivalent, the ProShares UltraShort Utilities (SDP) .

With utilities being by far the best-performing sector in the S&P 500 this year, UPW has of course benefited. The ETF attempts to deliver twice the daily returns of the Dow Jones U.S. Utilities Index, the underlying index for the $731.9 million iShares U.S. Utilities ETF (IDU) . [Utilities ETFs Shine in Tough Market]

Heading into Tuesday, IDU was up 15% year-to-date. UPW was up 30.3% heading into Tuesday, indicating the ETF has done essentially a perfect job of delivering twice the daily returns of IDU’s index.

Some traders looking to jolt their returns from the normally slow-moving utilities sector have taken note. Like BIS, the double-leveraged, inverse biotech ETF, UPW was small at the end of last year with just $10.32 million in assets under management, according to ProShares data.

And has been the case with BIS, the current market environment has opened some traders’ eyes to UPW, a fact highlighted by the $18.2 million worth of 2014 inflows to the ETF. That does not sound like much, but remember, UPW had just $10.32 million at the end of last year.

UPW hit a new 52-week high earlier Tuesday before drifting lower, but the fund has not been among the assortment of utilities ETFs regularly hitting new all-time highs. UPW currently resides 7.2% below its all-time high set nearly seven years ago.

ProShares Ultra Utilities