Leveraged ETFs That Gained More Than 35% To Start 2021

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Wall Street continued last year’s rally to start 2021 buoyed by optimism over COVID-19 vaccine rollout and more stimulus from Washington that is expected to result in faster-than-expected economic recovery. However, surge in coronavirus cases as well as a slew of weak economic data, including job, retail, and consumer confidence, weighed on investors’ sentiment.

Last week, president-elect Joe Biden rolled out a $1.9 trillion plan to prop up the economy. The plan offers payments of $1,400 to most Americans, increased enhanced federal unemployment benefits by $100 to $400 per week and extension of these through the end of September, and $350 billion in aid to state and local governments, which were excluded from Congress’ latest package. It also seeks to raise the minimum wage to $15 per hour, provide additional funds to schools and ramp up COVID-19 testing and vaccination.

These have led to 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 positive.

Below we highlighted some leveraged equity ETFs that piled up more than 35% to start 2021. These funds will continue to be investors’ favorites provided the sentiments remain bullish.

Indxx MicroSectors Cannabis 2X Leveraged ETN (MJO - Free Report) – Up 45%

This ETN is linked to two times leveraged performance of the Indxx MicroSectors North American Cannabis Index. The index includes North American stocks designed to track the performance of companies that provide products or services related to the medical or industrial use of cannabis or cannabis-related products. The fund has gathered $20.8 million in its asset base and charges 95 bps in annual fees. The note has an average daily volume of 2,000 shares.

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