Top traded leveraged ETF?

[Hakiza]

Explain about the top traded leveraged ETF, please.

[Dan]

Hi Hakiza,

Leveraged ETF track the futures market to boost the gain from a particular index. They may double or triple the profits from a certain index. Leveraged ETF are not many though they are widely known and used.

Their growing popularity is because they can make a considerable profit within a short period as long as the market trends are favorable.

Leveraged ETF are best suited for short-term investing since, in the long-term, their costs to maintain their market positions are expensive. Despite the significant profits leveraged ETF make, their volatility may result in many losses.

The VelocityShares 3x Inverse Crude Oil ETN ETF (DWT) was one of the most used leveraged ETF. However, it ceased to function.

The Direxion Daily Gold Miners Bear 2x Shares ETF (DUST) pursues to triple the inverse of the outcome of the gold index. It is among the most traded leveraged ETF.

 The ProShares UltraPro QQQ ETF (TQQQ) is also one of the most traded leveraged ETF.

[Leah]

Hello Hakiza,

Leveraged ETFs aim at doubling or tripling daily index returns using loaned money. Because of their compounding nature, traders get huge returns within short durations. This makes them ideal for investment methods involving high stakes. However, you only enjoy these benefits with the right ETFs. 
Topping the list is the NAIL fund. Following the DJSHMBT index, this ETF targets a 300% return from its daily benchmark. Apart from its 3X leverage, it spots opportunities in bull and bear markets. However, the instrument doesn’t chase the primary index beyond one day.
The TECL is also worth mentioning. Tracking the IXTTR index, this Direxion product allows a 3X leverage, hence, favoring bullish traders with a short-term mindset towards technology equities. As such, this asset is not for you if you want to buy and hold.
Not forgetting the UYM that translates to a 200% gain of the DJUSBM index. It also exposes you to multi-cap organizations in the materials sector. Since its leverage resets daily, prolonged holding results in compounded returns.