If you’re looking for clues about what exchange traded fund (ETF) investors want and what’s really moving in the markets, leveraged and inverse funds are a good way to take the pulse.
Wall Street has further stabilized this month, and no one asset class dominated. Investors sought havens in precious metals, took refuge overseas and were bullish on Treasuries and energy. Here are some of the top leveraged ETFs in the last month:
ProShares Ultra Silver (NYSEArca: AGQ)
It’s little wonder that a leveraged silver ETF would do so well. The poor man’s gold is much cheaper than the yellow metal while still handily outperforming it. Primarily driving the price now is safe-haven buying, driven by beliefs that governments around the world will enact more stimulus and weaken their currencies. There also may be less of the metal to go around here, too. Silver exports from China, the world’s largest, may drop about 40% this year as domestic demand from industry and investors climbs.
Direxion Daily Energy Bull 3x Shares (NYSEArca: ERX)
Energy got a nice boost from a host of solid earnings for big players in the sector. Exxon Mobil (NYSE: XOM), for example, saw its profit surge in the third quarter thanks to higher oil prices. Shell, ConocoPhillips and others have reported similar results. [Oil Exploration ETFs: A Bargain-Hunter’s Dream?]
Direxion Daily 30-Year Treasury Bull 3x Shares (NYSEArca: TMV)
Although whispers of a bond bubble just won’t go away, investors appear to be undeterred right now. Lackluster economic news kept them in the safety of Treasuries, even as they dipped a toe into riskier waters. The prospect of more quantitative easing by the Federal Reserve, however, could have a negative impact. Be on the alert.
Direxion Daily China Bull 3x Shares (NYSEArca: CZM)
China’s economy continues to be a juggernaut. Even though the country’s government has taken steps to cool off some of that growth in order to prevent a disastrous overheating scenario, their growth rate is still something that has developed nations green with envy now. [How to Choose Among China ETFs.]
ProShares UltraPro QQQ (NYSEArca: TQQQ)
TQQQ is designed to give three times the daily performance of the NASDAQ-100 index, which gives exposure to some of the best-known names in technology, including Apple (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT) and Google (NASDAQ: GOOG). Silicon Valley has staged something of a comeback in recent months, thanks to its willingness to diversify beyond information technology into other forms of technology – such as alternative energy.
Before you buy leveraged and inverse ETFs, read our special report to find out how they work, who they’re for and what the risks are.