U.S. Markets closed

The Zacks Analyst Blog Highlights: NAIL, CWEB, LABU, SOXL and EDC

Zacks Equity Research
Kinder Morgan (KMI) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.

For Immediate Release

Chicago, IL – Dec 29, 2017 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Direxion Daily Homebuilders & Supplies Bull 3X Shares NAIL, Daily CSI China Internet Index Bull 2X Shares CWEB, Direxion Daily S&P Biotech Bull 3x Shares LABU, Direxion Daily Semiconductor Bull 3x Shares SOXL and Direxion Daily MSCI Emerging Markets Bull and Bear 3X Shares EDC.

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Thursday’s Analyst Blog:

Top-Performing Leveraged ETFs of 2017

This has been a bumper year for the equity markets across the globe as almost all of them have risen every month for the first time in the 30-year history of the MSCI AC World Index. While the U.S. market is in the midst of the second-longest bull run in history with the S&P 500 and the Dow Jones heading for their best years since 2013, international investing has stolen the show on political gridlock in Washington (read: 7 Biggest ETF Stories of 2017 to Continue in 2018).

Encouraging domestic and international fundamentals as well as better-than-expected corporate earnings are the major catalysts to the global rally. Technology surge and high-flying Internet stocks have also added to the strength. Further, tax reform and jump in oil prices propelled the stocks higher in the second half.

The bullishness has resulted in huge demand for leveraged ETFs as investors seek to register big gains in a short span. Leveraged funds provide multiple exposure (i.e. 2x or 3x) to the daily performance of the underlying index by employing various investment strategies such as swaps, futures contracts and other derivative instruments. Due to their compounding effect, investors can enjoy higher returns in a very short period of time, provided the trend remains a friend (read: Leveraged ETFs: How Are They Built and What's Hot Now?).

Below, we have highlighted seven ETFs that crushed the market this year with stupendous returns. Moreover, these funds will continue to be investors’ darlings heading into the New Year if sentiments remain the same.

Direxion Daily Homebuilders & Supplies Bull 3X Shares – Up 263.6%

The housing sector has been in good shape thanks to lower mortgage rates, ongoing job creation, wage gains, and accelerating household formations. The fund creates a three times (3x) leveraged long position in the Dow Jones U.S. Select Home Construction Index. It charges an annual fee of 95 bps and trades in a light average daily volume of about 36,000 shares. The fund has accumulated AUM of $82.5 million.

Daily CSI China Internet Index Bull 2X Shares – Up 158.6%

This ETF is benefiting from the dual tailwinds of emerging market lead and a surge in the technology sector. Increasing euphoria on digitalization and e-commerce have made the space lucrative. The fund offers twice (2x) the leveraged exposure to the Chinese Internet market by tracking the CSI Overseas China Internet Index. It charges an annual fee of 95 bps and trades in a moderate average daily volume of about 62,000 shares. The fund has accumulated AUM of $101.6 million

Direxion Daily S&P Biotech Bull 3x Shares – Up 157.5%

Encouraging industry trends and a favorable policy environment, including faster drug approval and deregulation, led to surge in biotech space. The fund creates a 3x leveraged long position in the S&P Biotechnology Select Industry Index. It charges an annual fee of 95 bps and trades in a heavy average daily volume of about 1.2 million shares. The fund has accumulated AUM of $434.1 million (read: Value Biotech ETFs to Buy Now).

Direxion Daily Semiconductor Bull 3x Shares – Up 147.6%

This ETF targets the semiconductor corner of the technology sector with 3x leveraged exposure to the PHLX Semiconductor Sector Index. Rapid adoption of cloud, Internet of Things, autonomous cars, gaming, wearables, VR headsets, drones, virtual reality devices, artificial intelligence and other advanced information technologies are fueling demand for chips and other semiconductor products. SOXL has amassed about $650.2 million in its asset base while charges 95 bps in fees per year. Volume is good as it exchanges nearly 508,000 shares a day on average.

Direxion Daily MSCI Emerging Markets Bull and Bear 3X Shares – Up 130.8%

This ETF targets the emerging market with 3x leveraged exposure to the MSCI Emerging Markets Index. After many years of underperformance, low valuations have made emerging market products especially appealing to investors. EDC has amassed about $299.5 million in its asset base while charges 95 bps in fees per year from investors. Volume is moderate as it exchanges around 177,000 shares a day on average.

Bottom Line

While this strategy is highly beneficial for short-term traders, it could lead to huge losses compared with traditional funds in fluctuating or seesaw markets. Further, their performances could vary significantly from the actual performance of their underlying index over a longer period when compared with the shorter period (such as, weeks or months) due to their compounding effect (see: all Leveraged Equity ETFs here).

Still, for ETF investors who are bullish on global equities for the near term, either of the above products could make an interesting choice. Clearly, a near-term long could be intriguing for those with high-risk tolerance, and a belief that the trend is a friend in this corner of the investing world.

Want key ETF info delivered straight to your inbox?

Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1 Stock of the Day pick for free.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Strong Stocks that Should Be in the News

Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has nearly tripled the market from 1988 through 2015. Its average gain has been a stellar +26% per year.See these high-potential stocks free >>.

Follow us on Twitter: https://twitter.com/zacksresearch

Join us on Facebook: https://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

Media Contact

Zacks Investment Research

800-767-3771 ext. 9339



Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
DIRX-D SP BBULL (LABU): ETF Research Reports
DIR-D SM BL 3X (SOXL): ETF Research Reports
DIR-EM BULL3X (EDC): ETF Research Reports
DIR-D CII BL2X (CWEB): ETF Research Reports
DIR-D HB&SP BU3 (NAIL): ETF Research Reports
To read this article on Zacks.com click here.