Best/Worst Leveraged, Inverse ETFs

February 05, 2014

A bumpy start to the New Year temporarily puts leveraged ETFs in the driver’s seat.

Last year was a banner year for equities, as the S&P 500 Index soared to a 29 percent return fueled in part by the Federal Reserve’s easy money policies, lifting returns of equity-focused ETFs in the process.

But the good times have not rolled over into the New Year, as an additional $10 billion-a-month taper by the Fed, a slowdown in China and weakness in emerging markets such as Thailand and Turkey have spooked investors. Year-to-date, the S&P is down 5.0 percent.

Leveraged ETFs Tops

Enter leveraged and inverse ETFs, which topped the charts as the best and worst ETFs year-to-date. For example, the VelocityShares 3X Long Natural Gas ETN (UGAZ), the Direxion Daily Russia Bear 3X (RUSS) and the Direxion Daily Brazil Bear 3x (BRZS) year-to-date have returned 50.9 percent, 42.3 percent and 39.2 percent, respectively, according to data compiled by

UGAZ provides 3x the daily return of the S&P GSCI Natural Gas Index Excess Return, a production-weighted index of world natural gas producers listed in Organisation for Economic Co-operation and Development countries. The fund has a high expense ratio—1.65 percent, or $165 for every $10,000 invested.

BRZS looks to give investors 300 percent of the inverse (or opposite) of the performance of the MSCI Brazil 25-50 Index. The fund’s expense ratio is 1.00 percent, or $100 for every $10,000 invested.

RUSS attempts to provide -3x daily exposure to a broad and comprehensive underlying index that includes Russian companies domiciled and traded inside and outside of Russia. However, the fund, which also has a 1.00 percent expense ratio, is currently at high risk for closure due to a lack of investor interest, according to an analyst report. RUSS launched in May 2011 and currently manages $5.8 million.

Top 10 YTD Performers

Ticker Name YTD Performance Weekly Performance AUM ($, mm)
UGAZ VelocityShares 3X Long Natural Gas ETN 50.88 0.00 50.74
RUSS Direxion Daily Russia Bear 3X 42.28 0.00 6.36
BRZS Direxion Daily Brazil Bear 3x 39.17 0.00 3.53
JNUG Direxion Daily Junior Gold Miners Bull 3X 38.12 0.00 27.19
BOIL ProShares Ultra DJ-UBS Natural Gas 36.90 0.00 56.89
NUGT Direxion Daily Gold Miners Bull 3X 32.50 0.00 680.14
BXDB Barclays Short B Leveraged Inverse S&P 500 TR ETN 32.25 0.00 2.29
YANG Direxion Daily FTSE China Bear 3X 30.20 0.00 16.93
KORZ Direxion Daily South Korea Bear 3X 28.69 0.00 1.51
EDZ Direxion Daily Emerging Markets Bear 3x 28.44 0.00 106.77




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