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Top-Performing Leveraged ETFs in First Year of Trump's Win

It’s been a year since Donald Trump came into power and his administration led to a boom in the stock market, pushing major indices to multiple highs on several occasions. The S&P 500 rose 21.6%, Dow Jones climbed 28.5% and the Nasdaq Composite Index soared 30.3% since Election Day. Per Goldman Sachs, Trump’s post-election stock market jump is the fourth largest since 1936.

The rally was driven by the expectation that Trump will enact policies that will boost economic growth and  corporate profits, cut taxes, slash regulations, increase spending and inflation although his agenda is facing severe political gridlock. Trump promised to double the pace of economic growth from 2%, create 25 million jobs over 10 years, and make the U.S. economy the strongest in the world (read: ETF Winners of the First Year of Trump Era).

Funds in the United States have also enjoyed strong inflows led by equities, since Trump won the presidential elections a year ago. Total net assets under management of U.S. mutual funds including ETFs surged 16% to $21.1 trillion over the one-year period ended Sep 30, according to data from Thomson Reuters. About $11.4 trillion comes from equity funds.

While almost every corner of the stock market is celebrating Trump’s one-year anniversary, leveraged ETFs have piled up abnormal returns post-election. Leveraged products create a leveraged (i.e 2x or 3x) long position in the underlying index through the use of swaps, options, futures contracts and other financial instruments. Due to their compounding effect, investors can enjoy higher returns in a very short period of time provided the trend remains a friend (see: all Leveraged Equity ETFs here).

However, these funds run the risk of huge losses compared to traditional funds in fluctuating or erratic markets. Further, their performance could vary significantly from the actual performance of their underlying index over a longer period when compared with a shorter period (such as weeks or months).

Below, we have highlighted five ETFs that will continue to be investors’ darlings in Trump’s administration.

Direxion Daily Semiconductor Bull 3x Shares SOXL – Up 255.3%

This ETF targets the semiconductor corner of the U.S. technology sector with three times (3x) leveraged exposure to the PHLX Semiconductor Sector Index. It has amassed about $586.5 million in its asset base while charges 95 bps in fees per year. Volume is good as it exchanges around 468,000 shares a day on average (read: 5 Top-Performing Leveraged ETFs of October).

Direxion Daily Homebuilders & Supplies Bull 3X Shares NAIL – Up 220.1%

The fund creates three times leveraged long position in the Dow Jones U.S. Select Home Construction Index. It charges an annual fee of 95 bps and trades in a light average daily volume of about 17,000 shares. The fund has accumulated AUM of $38.6 million (read: 3 ETFs to Buy as New Home Sales Surge).

Direxion Daily Technology Bull 3x Shares TECL – Up 137.1%

This ETF targets the technology sector with three times exposure to the Technology Select Sector Index. It has amassed about $477.1 million in its asset base while charges 95 bps in fees per year from investors. Volume is good as it exchanges around 145,000 shares a day on average (read: 7 Top-Ranked Tech ETFs on Unstoppable Rally).

ProShares UltraPro QQQ TQQQ – Up 115.8%

This ETF provides 3x the returns of the daily performance of the NASDAQ-100 Index. It is one of the popular and liquid options in the leveraged large-cap space with AUM of $2.2 billion and average daily volume of 3.8 million shares. TQQQ charges 95 bps in fees per year.

ProShares UltraPro Dow30 UDOW – Up 106.6%

This product tracks the Dow Jones Industrial Average and offers three times exposure to the index. It has accumulated $319.6 million in its asset base and trades in a solid average daily volume of roughly 323,000 shares. Expense ratio comes in at 0.95% (read: Dow ETFs Soar as the Index Hits 23,000).

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DIR-TEC BULL3X (TECL): ETF Research Reports
DIR-D SM BL 3X (SOXL): ETF Research Reports
PRO-ULT QQQ (TQQQ): ETF Research Reports
PRO-ULT DOW30 (UDOW): ETF Research Reports
DIR-D HB&SP BU3 (NAIL): ETF Research Reports
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