There is no dearth of leveraged exchange traded funds on the market today, but some leveraged sector offerings can go unnoticed.
For as well-known as the Direxion Daily Gold Miners Bull 3X Shares (NYSEArca: NUGT) and the UltraShort Financials ProShares (NYSEArca: SKF) are and for as popular as the ProShares Ultrashort Nasdaq Biotechnology (NasdaqGM: BIS) has recently become, some leveraged sector ETFs toil in obscurity while delivering impressive returns. [Sudden Popularity for Inverse Biotech ETF]
That has been life for the ProShares Ultra Utilities (NYSEArca: UPW). It is not a stretch to say that given the utilities sector’s reputation for being a conservative, low beta hideout that investors may be surprised to learn an ETF like UPW even exists. There is also a bearish equivalent, the ProShares UltraShort Utilities (NYSEArca: SDP).
With utilities being by far the best-performing sector in the S&P 500 this year, UPW has of course benefited. The ETF attempts to deliver twice the daily returns of the Dow Jones U.S. Utilities Index, the underlying index for the $731.9 million iShares U.S. Utilities ETF (NYSEArca: IDU). [Utilities ETFs Shine in Tough Market]
Heading into Tuesday, IDU was up 15% year-to-date. UPW was up 30.3% heading into Tuesday, indicating the ETF has done essentially a perfect job of delivering twice the daily returns of IDU’s index.
Some traders looking to jolt their returns from the normally slow-moving utilities sector have taken note. Like BIS, the double-leveraged, inverse biotech ETF, UPW was small at the end of last year with just $10.32 million in assets under management, according to ProShares data.
And has been the case with BIS, the current market environment has opened some traders’ eyes to UPW, a fact highlighted by the $18.2 million worth of 2014 inflows to the ETF. That does not sound like much, but remember, UPW had just $10.32 million at the end of last year.
UPW hit a new 52-week high earlier Tuesday before drifting lower, but the fund has not been among the assortment of utilities ETFs regularly hitting new all-time highs. UPW currently resides 7.2% below its all-time high set nearly seven years ago.
ProShares Ultra Utilities
