5 Leveraged 3X ETFs Thrived Last Week Amid Trade War Volatility

If the U.S.-China trade wars taught investors anything last week, it’s the notion that it’s profitable to be a bear. Gains were had for inverse exchange-traded funds (ETFs) of the leveraged variety.

China responded to the latest tariff threats by U.S. President Donald Trump by promising to take “necessary countermeasures” if the Trump administration follows through on its threat to increase tariffs on Chinese goods.

In turn, China’s Commerce Ministry said that it would make retaliatory moves if U.S. tariffs on $200 billion of Chinese goods are increased to 25% from 10% as promised by the Trump administration. It did just that on Monday:

  • Category 1 (includes cotton, machinery, grains) went from 10% to 25%
  • Category 2 (includes aircraft parts, optical instruments, certain types of furniture) went from 10% to 20%
  • Category 3 (includes corn flour, wine) went from 5% to 10%
  • Category 4 (includes certain types of chemical, rare earths, medical equipment like ultrasound and MRI machines) stayed the same at 5%

That means that being a bear might be the best strategy for a trade war scare this week. As for last week, here are the five ETFs that benefited the most:

  1. Daily FTSE China Bear 3X Shares (NYSEArca: YANG)–up 21.4 percent: The fund seeks daily investment results equal to 300 percent of the inverse (or opposite) of the daily performance of the FTSE China 50 Index. The index consists of the 50 largest and most liquid public Chinese companies currently trading on the Hong Kong Stock Exchange (“SEHK”).
  2. Direxion Daily Semiconductor Bear 3X ETF (NYSEArca: SOXS)–up 19 percent: SOXS seeks daily investment results of 300 percent of the inverse of the daily performance of the PHLX Semiconductor Sector Index. The index measures the performance of domestic companies engaged in the design, distribution, manufacture and sale of semiconductors. The fund is non-diversified.
  3. MicroSectors FANG+ Index -3X Inverse Leveraged ETN (NYSEArca: FNGD)–up 18.5 percent: FNGD seeks return linked to a three times inverse leveraged participation in the daily performance of the NYSE Fang+™ Index, total return. The notes are intended to be daily trading tools for sophisticated investors to manage daily trading risks as part of an overall diversified portfolio. The index is an equal-dollar weighted index designed to represent a segment of the technology and consumer discretionary sectors consisting of highly-traded growth stocks of technology and tech-enabled companies.
  4. Direxion Daily MSCI Emerging Markets Bear 3X ETF (NYSEArca: EDZ)–up 16.3 percent: EDZ seeks daily investment result of 300% of the inverse of the daily performance of the MSCI Emerging Markets IndexSM. The fund invests in swap agreements, futures contracts, short positions or other financial instruments that, in combination, provide inverse or short leveraged exposure to the index equal to at least 80% of the fund’s net assets.
  5. Direxion Daily Technology Bear 3X ETF (NYSEArca: TECS)–up 10.9 percent: TECS seeks daily investment results of 300 percent of the inverse of the daily performance of the Technology Select Sector Index. The index is provided by S&P Dow Jones Indices and includes domestic companies from the technology sector. It is non-diversified.

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