Large-Caps Lead the Leveraged ETF Battle | ETF Trends

From large to small, leveraged exchange traded funds (ETFs) are following that chronological size difference with respect to their gains year-to-date. As such, large-caps lead the way with the Direxion Daily S&P 500® Bull 3X Shares ETF (SPXL).

So far this year, the fund is up almost 70%, highlighting the strength of large-caps’ biggest names in the S&P 500. SPXL, under normal circumstances, invests at least 80% of its net assets (plus borrowing for investment purposes) in financial instruments, such as swap agreements and securities of the index, ETFs that track the index, and other financial instruments that provide daily leveraged exposure to the index or ETFs that track the index.

Fittingly, in the middle of the pack comes the Direxion Daily Mid Cap Bull 3X Shares (MIDU), which is up just over 50%. MIDU seeks daily investment results, before fees and expenses, of 300% of the daily performance of the S&P MidCap 400 Index.

Mid-cap equities strike a perfect balance between large- and small-caps. They provide the stability of the former, while adding the growth component of the latter without the heavier volatility.

“Some stocks might seem too big to generate explosive growth,” a Motley Fool article explained. “Others could be so small that their risk level isn’t appealing. However, similar to the old story of Goldilocks and the three bears, investors can find stocks that are just right — not too big and not too small.”

Mid-cap stocks can meet those criteria,” the article added. “These stocks, which are usually defined as having market caps between $2 billion and $10 billion, often provide a sweet spot for investors looking for tremendous growth prospects with less risk than most small-cap stocks have.”

Small-Caps Trail, but Still Provide Strong Upside

The Direxion Daily Small Cap Bull 3X Shares (TNAstarted off the year strong amid a global recovery, but has since faltered. Nonetheless, the fund is still up a shade over 30% and could provide traders with upside should the market experience another rally towards the end of the year.

TNA tracks the Russell 2000 Index and seeks daily investment results equal to 300% of the daily performance of the index. Small-cap equities can be subjected to large swings in the market, so traders need to have a cast-iron stomach in a downturn, but during an upswing, large gains could be had.MIDU ChartFor more news, information, and strategy, visit the Leveraged & Inverse Channel.