The markets and exchange traded funds (ETFs) have plowed through with large gains since last year, but the real estate and financial sectors have been lagging. If you’re not shy about risk, leveraged ETFs focused on those sectors have been adding oomph.
Among the top-performing leveraged funds for the last month have been three offered by Direxion and ProShares that make leveraged plays on the financial and real estate sectors. For the risk-hungry, these funds can be a way to make up for the tepidness of the sectors.
A recent S&P/Case-Shiller survey suggested that housing prices bottomed out in April 2009, and since then, the index has gained 3% through January 2010, reports James B. Stewart for The Wall Street Journal.
Additionally, Reis Inc., a commercial real estate research firm, concluded that average rents in the office sector only dropped 0.8% in the first quarter year-over-year, which may hint that the bottom is near if not already passed for the commercial real estate sector. [Commercial Real Estates ETFs: At The Bottom?]
If you’re inclined to invest in the commercial real estate sector, Stewart suggests a mix of ETFs, managed mutual fund, or REITs, and maybe some financial investments with banks that hold commercial real estate exposure in the form of loans and debt.
The financial sector has been on the radar, as well. Although it has come off the lows in a big way, the sector is still dealing with major issues. One trouble spot could be any potential regulation handed down by the Obama administration. If such laws pass, they could limit the ability of banks to grow “too big to fail.” Until the picture comes more into focus and we fully understand how banks will cope with such laws, the financial sector could experience tepid growth. [Financial ETFs in Turnaround Mode.]
Leveraged and inverse ETFs aren’t for everyone, though. Before you buy, understand how they work and what different market conditions mean for their performance by reading our special report.
For more information on the commercial real estate or the financial sector, visit our commercial real estate or financial categories.
- Direxion Daily Real Estate Bull 3X Shrs (NYSEArca: DRN): up 29.7% in last month
- Direxion Daily Financial Bull 3X Shares (NYSEArca: FAS): up 26.7% in last month
- Ultra Real Estate ProShares (NYSEArca: URE): up 17.9% in last month
Max Chen contributed to this article.