5 Best-Performing Leveraged ETFs Of January

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The month of January was volatile for the global stock market. After hitting record highs to start the New Year on optimism over COVID-19 vaccine rollout and more stimulus from Washington, the surge in coronavirus cases and a slew of weak economic data continued to weigh on investors’ sentiment.

In fact, the retail trading frenzy in some of the stocks like GameStop Corp. (GME - Free Report) and AMC Entertainment Holdings (AMC - Free Report) by Reddit users led to heightened volatility.

However, extended and stricter lockdowns continued to drive demand for e-commerce in everything, leading to an upside in stock prices. Solid corporate earnings added to the strength.

This has resulted in huge demand for leveraged ETFs as investors seek to register big gains in a short span. Leveraged funds provide multiple exposure (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 positive.

Below we highlight the five best-performing leveraged equity ETFs that piled up handsome gains last month. These funds will continue to be investors’ darlings provided the sentiments remain bullish.

Direxion Daily Retail Bull 3X Shares (RETL - Free Report) – Up 124.7%

This ETF offers three times leveraged exposure to the S&P Retail Select Industry Index. The product has amassed about $94.7 million in its asset base, while charging 95 bps in fees per year. Its volume is lower as it exchanges around 73,000 shares a day on average.

ProShares Ultra VIX Short-Term Futures ETF (UVXY - Free Report) – Up 37.5%

This fund offers exposure to one and one-half times the daily performance of the S&P 500 VIX Short-Term Futures Index. It has accumulated $1.8 billion and an average daily volume of 53.1 million shares. UVXY charges 95 bps in annual fees.

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