Increasing Activity in Leveraged International ETFs

On a day when stocks are getting crushed, cozying up to international exchange traded funds, particularly those of the leveraged variety, probably does not appear to be an attractive idea.

However, volume in some leveraged international ETFs has recently been on the rise, though the reasons for those volume increases vary from fund to fund. Among Direxion’s triple-leveraged ETFs showing the largest five-day volume increases relative to their 20-day average volume, three are leveraged emerging markets ETFs: The Direxion Daily China 3x Bull (NYSEArca: YINN), Direxion Daily Brazil Bull 3x Shares (NYSEArca; BRZU) and the Direxion Daily Latin America Bull 3x Shares (NYSEArca: LBJ).

With four of the 10 worst non-leveraged ETFs on a year-to-date basis being Latin America funds and three of those being Brazil ETFs, volume spikes in BRZU and LBJ are not surprising. And with the ProShares UltraShort MSCI Brazil Capped (NYSEArca: BZQ) being the lone inverse Brazil ETF on the market, some risk-tolerant traders could be turning to BRZU and LBJ as short ideas to play the ongoing downdraft in Brazilian stocks.

Five Brazil ETFs, including the iShares MSCI Brazil Capped ETF (NYSEArca: EWZ), of which BRZU is the triple-leveraged equivalent, hit 52-week lows today. BRZU’s volume over the past 20 days has, on average, been 22.4% above the 100-day average. [Things are Really Bad for Brazil ETFs]

For more upbeat reasons, volume has surged in the Direxion Daily FTSE Europe 3x Bull Shares (NYSEArca: EURL) as well. EURL, which debuted in January 2014, attempts to deliver three times the daily performance of the FTSE Developed Europe Index, the underlying benchmark for the Vanguard FTSE Europe ETF (NYSEArca: VGK). [Leveraged Europe ETF in the Spotlight]