Best Leveraged ETFs Of May

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Stocks across the globe logged in the fourth consecutive month of gains with the MSCI's broadest index of world stocks gaining about 1.4% in May. It marks the longest monthly rising streak for the index since August 2020, according to Refinitiv data. With this, the global stocks are now around 20% above pre-pandemic highs.

European stocks led the way higher, notching a record high at the end of the last month while U.S. equities hovered around their peaks. The gains came on the back of continued optimism over the global economic recovery despite the fact that a jump in commodity prices sparked inflation fears making investors jittery. The rise in prices could prompt the central banks to tighten policies earlier than expected.

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 some best-performing leveraged equity ETFs from different corners of the market that gained in double digits last month. These funds will continue to be investors darlings, provided the sentiments remain bullish.

MicroSectors Gold Miners 3X Leveraged ETN (GDXU - Free Report) – Up 47.8%

This ETN seeks to deliver three times (3X or 300%) the performance of the S-Network MicroSectors Gold Miners Index. It has amassed $38.6 million in its asset base since its debut last December and charges 95 bps in annual fees. The product trades in an average daily volume of 193,000 shares.

Direxion Daily S&P Oil & Gas Exploration & Production Bull 2X Shares (GUSH) – Up 21.7%

This fund offers two times exposure to the daily performance of the S&P Oil & Gas Exploration & Production Select Industry Index. It has accumulated $827.5 million in its asset base and the average daily volume is solid at around 1.8 million shares. The ETF charges 95 bps in annual fees.

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