The stock market across the globe continues to show strong complacency this year amid record levels of corporate debt and a flattening yield curve. The MSCI World Index registered its best start to a year in eight years while the Wall Street logged in its best start in more than a decade.
The combination of factors including strong corporate earnings, solid momentum in the global economy, booming trade, jump in oil prices and weak dollar are powering the global rally. Trump’s tax overhaul and a spending spree are boosting investors’ confidence in the world’s largest economy while China, the world’s second largest economy, is holding up well. Meanwhile, Eurozone has been growing at the fastest pace in a decade.
Improving growth has prompted the central banks outside the United States to follow the Fed in policy tightening. The prospect to end the cheap money era is fueling growth in the global stocks.
All these have resulted in huge demand for leveraged ETFs as investors seek to register big gains in a short span. Leveraged funds provide multiple exposure (i.e. 2x or 3x) to the daily performance of the underlying index by employing various investment strategies such as swaps, futures contracts and other derivative instruments. Due to their compounding effect, investors can enjoy higher returns in a very short period of time, provided the trend remains a friend.
Below, we have highlighted eight ETFs that have piled up abnormal returns to start the year. These funds will continue to be investors’ darlings provided the sentiments remain the same.
Direxion Daily Russia Bull 3X Shares (RUSL – Free Report) – Up 32.2%
Russian stocks have been on a smooth ride buoyed by a rise in oil prices. The news of the buyback plan from Russian oil producer Lukoil also added to the optimism. The ETF creates a three times (3x or 300%) long position in the MVIS Russia Index. It has amassed about $174.2 million in its asset base while charges 95 bps in fees per year from investors. Volume is moderate as it exchanges around 113,000 shares a day on average.
