Things were no different last week for the leveraged ETF field as gains and losses were almost confined to the similar spaces as that of the prior week. Bull ETFs on Russia and India remained the top picks.
However, semiconductor emerged as a winner last week with a bullish note on the space. Let’s take a look at some top and worst performing leveraged/inverse ETFs last week to check the leaders and laggards in the market now.
| Top Perfromers | Return Last Week |
| Direxion Daily Russia Bull 3X (NYSE:RUSL) | 16.7% |
| Direxion Dly India Bull 2X Shares (NYSE:INDL) | 12.2% |
| Direxion Dly Semiconductor Bull 3X (NYSE:SOXL) | 7.55% |
| ProShares Trust UltraPro QQQ (NASDAQ:TQQQ) | 7.52% |
| Worst Performers | Return Last Week |
| Direxion Daily Russia Bear 3X (NYSE:RUSS) | -14.7% |
| Direxion Dly Semiconductor Bear 3X (NYSE:SOXS) | -7.36% |
| UltraPro Short QQQ (NASDAQ:SQQQ) | -7.27% |
Russia ETFs in Focus
Russia received the much-needed thrust last week from its historic gas deal sign worth $400-billion with China. Russia has been threatened by the West from the start of this year with some economic sanctions against it for its Crimea invasion and intentions to foray into eastern Ukraine.
Amid such a situation, this 30-year deal has given Russia ETFs a big-time boost as Russian energy giant Gazprom will transport no less than 1.3 trillion cubic feet of natural gas – around one-fifth of China’s present annual demand. As a result, investor inclination toward Russia has returned, making RUSL the topper last week. RUSL gives three times exposure to the DAX global Russia Index. On the other hand, RUSS – a triple leverage inverse equity fund of Russia – shed the most.
India ETF in Focus
India ETFs are yet to be done with the rally. The ETFs are still surging on Narendra Modi led Bharatiya Janata Party (BJP)’s win in the general election. Narendra Modi – perceived as a reform-oriented politician – as India’s prime minister designate has raised optimism about the nation and the stocks surged. As result, INDL became the second best performer last week, like the prior week.
Semiconductor ETFs in Focus
The semiconductor industry has been on fire this year. The industry has exhibited a stronger trend in Q1 despite geo-political concerns, slowdown in China and sluggish U.S. growth thanks to a harsh winter. Per the data collected by SEMI , combined equipment billings grew 33% in Q1. Per the sources, this jump was mainly due to easy year-over-year comparison as last two years the industry witnessed sluggish investment.
As a result, SOXL – which offers thrice the exposure on the PHLX Semiconductor Sector Index – was the third top performing leveraged ETF last week. And for a valid reason, SOXS – offering three times inverse exposure to the PHLX Semiconductor Sector Index – were among the top losers.
NASDAQ-100 in Focus
TQQQ also added substantial gains last week which spurred investors to consider the Nasdaq 100 Index again. TQQQ looks to track daily investment results that match up to triple the daily performance of the NASDAQ-100 Index.
This Index consists of 100 of the largest domestic and international non-financial companies listed on The NASDAQ Stock Market. Investors should note that NASDAQ was hard hit this year on high-beta pain. However, somewhat better economic indicators, bullish housing data and fair valuation might have again brought back investors to this space.
As a result, TQQQ had a notably strong performance last week while SQQQ – that offers three times the inverse exposure to the same index – lost 7.27%.
Bottom Line
Investors should note that the above products are not suitable for long-term sell or hold purposes as these are rebalanced on a daily basis. Instead, investors should strictly make a short-term play on them should they believe this would be the trend in the near future (Zacks doesn’t rank inverse and leveraged ETFs in view of their short-term performance objectives).