5 Best-Performing Leveraged ETFs Of January

The global stock market started 2018 on a solid footing, hitting a series of record highs on an uptick in economies around the world, strong corporate earnings, booming trade, jump in oil prices and a weak dollar. Trump’s tax biggest overhaul in decades and a spending spree are boosting investors’ confidence in the world’s largest economy while China, the world’s second-largest economy, is holding up well. Meanwhile, Eurozone has been growing at the fastest pace in a decade.

However, investors’ concern has started to show up lately. This is especially true given the tightening monetary policies outside the United States that are lifting yields and making riskier assets less attractive. Additionally, profit-taking activity after a record run, fears of overvaluation and geopolitical tension are also acting as headwinds.

Given this, demand for leveraged ETFs is growing 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.

Below, we have highlighted five ETFs that have piled up abnormal returns in the first month of 2018. These funds will continue to be investors’ darlings provided the sentiments remain the same.

Direxion Daily Brazil Bull 3x Shares (BRZU – Free Report) – Up 47.1%

Brazilian stocks have gained on turnaround in the economy, which has started to show signs of life on lower interest rates and increased investments. The ETF creates a three times (3x or 300%) long position in the MSCI Brazil 25/50 Index. It has amassed about $146.1 million in its asset base while charges 95 bps in fees per year from investors. Volume is solid as it exchanges around 554,000 shares a day on average.