Loving Leveraged Latin America ETFs

In recent years, Latin American stocks and the relevant exchange traded funds have been emerging markets duds.

Over the past three years, the iShares Latin American 40 ETF (NYSEArca: ILF) has tumbled 26.5% while the iShares MSCI Emerging Markets ETF (NYSEArca: EEM) is higher by more than 8%. However, recent resurgences by marquee Latin America ETFs, including ILF and the iShares MSCI Brazil Capped ETF (NYSEArca: EWZ), is sparking renewed interest in leveraged funds tracking the region’s stocks.

After slumping to start 2015, ILF and EWZ, the largest Brazil ETF, are in the midst of impressive one-month rallies that have seen the ETFs surge 11% and 16.4%, respectively. [Better Things for Brazil ETFs in Q2]

Those moves have, predictably been boons for theDirexion Daily Latin America Bull 3x Shares (NYSEArca: LBJ) and the Direxion Daily Brazil Bull 3x Shares (NYSEArca: BRZU).

With a 5.1% gain Tuesday, BRZU is up 52.3% over the past month, indicating the former is doing better than merely delivering triple the gains posted by EWZ. Entering Tuesday, only the Direxion Daily China 3x Bull (NYSEArca: YINN) and the Direxion Daily Russia Bull 3x Shares (NYSEArca: RUSL) had delivered better April returns than BRZU.

LBJ gained nearly 4% on more than double the average daily turnover Tuesday, extending its one-mont gain to 32.4%. LBJ seeks to deliver three times the daily performance of the S&P Latin America 40 Index, ILF’s underlying benchmark.

Investors are taking notice. Since the start of the year, BRZU has seen its shares outstanding count surge 52% while creations in LBJ have sent that ETF’s shares outstanding up 31%, according to Direxion data.