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]
Investors should remember the FTSE Developed Europe Index is not a dedicated Eurozone index. Rather, that index features significant exposure to British, Nordic and Swiss equities. Still, ebullience toward European stocks has helped EURL tack on $27.3 million in new assets this year. EURL’s volume over the past 20 days has been more than double the 100-day average, according to Direxion data.
In addition to BRZU, other leveraged emerging markets ETFs have seen notable increases in turnover as well. Although Russia ETFs are not acting well today, two such ETFs are among the best non-leveraged performers this year, crushing the Direxion Daily Russia Bear 3x Shares (NYSEArca: RUSS) in the process.
RUSS is down 47.3% year-to-date and over the past month, only the Direxion Daily Junior Gold Miners Index Bear 3X Shares (NYSEArca: JDST) has been more volatile among Direxion’s leveraged bearish ETFs. RUSS’ average volume over the past 20 days has been more than 80% above the 100-day average. That ETF’s pain has meant gains for the Direxion Daily Russia Bull 3x Shares (NYSE: RUSL). Although it is the most volatile of Direxion’s bullish leveraged ETFs over the past month, RUSL is up 18.4% this year.
Direxion Daily FTSE Europe 3x Bull Shares