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16 Highly Traded Leveraged/Inverse ETFs Of 2016

Thanks to heightened volatility in the stock markets, leveraged or inverse ETFs have been gaining immense popularity as investors are making a dash for big gains on quick market turns. This is especially true as the stocks logged their best gains last week on a year-to-date basis after seeing the worst-ever start to a year. However, the markets fell again in yesterday’s trading session, keeping the volatility levels high. Leveraged or inverse products either create a leveraged long/short position, an inverse long/short position or a leveraged inverse long/short position in the underlying index through the use of swaps, options, future contracts and other financial instruments. Due to their compounding effect, investors can enjoy higher returns in a very short period of time, provided the trend remains a friend. However, these funds run the risk of huge losses compared to traditional funds in fluctuating or erratic markets. Further, their performance could vary significantly from the actual performance of their underlying index over a longer period when compared to a shorter period (such as weeks or months). In spite of this drawback, investors flocked to these products for outsized gains in a short span. We have highlighted 16 leveraged/inverse ETFs that have seen massive trading so far this year. Most of these ETFs have delivered negative returns from a year-to-date look, yet have been investors’ darlings with abnormal returns piled up in a short period when the trend favored a specific corner of the world. ProShares Ultra VIX Short-Term Futures ETF (NYSEARCA: UVXY ) Leveraged Factor: 2x Inverse: No Benchmark Index: S&P 500 VIX Short-Term Futures Index YTD Volume: $48.38 billion This product provides two times (2x) exposure to the daily performance of the S&P 500 VIX Short-Term Futures Index, which reflects an implied volatility of the S&P 500 Index at various points along the volatility forward curve. It offers a daily rolling long position in the first- and second-month VIX futures contracts. The ETF has amassed about $378.4 million in its asset base while charging 95 bps in fees per year from investors. It is the most heavily traded ETF so far this year, with the highest trading volume of $48.38 billion. The fund has gained 3 1.3% in the year-to-date time frame. VelocityShares Daily Inverse VIX Short-Term ETN (NASDAQ: XIV ) Leveraged Factor: 1x Inverse: Yes Benchmark Index: S&P 500 VIX Short-Term Futures Index YTD Volume: $25.76 billion With an AUM of more than $ 1 billion, this ETN is popular and offers inverse (opposite) exposure to the S&P 500 VIX Short-Term Futures Index, charging a higher expense ratio of 1.35%. The note has seen total trading volume of $25.76 billion so far this year and has lost 23.7%. Direxion Daily Small Cap Bull 3x Shares ETF (NYSEARCA: TNA ) Leveraged Factor: 3x Inverse: No Benchmark Index: Russell 2000 Index YTD Volume: $14.54 billion This product provides triple (3x) leveraged play to the small-cap Russell 2000 Index, charging 95 bps in fees and expenses. It has been able to manage $787.7 million in its asset base with year-to-date trading volume of $ 14.54 billion. TNA is down 28.9% so far this year. ProShares UltraShort S&P 500 ETF (NYSEARCA: SDS ) Leveraged Factor: 2x Inverse: Yes Benchmark Index: S&P 500 index YTD Volume: $14.33 billion This fund seeks two times leveraged inverse exposure to the S&P 500 index, charging 89 bps in fees. It is relatively popular, having amassed $ 1.5 billion in AUM and having exchanged a total of $ 14.33 billion in volume so far. SDS is up 7.6% in the year-to-date time frame. VelocityShares Daily 2x VIX Short-Term ETN (NASDAQ: TVIX ) Leveraged Factor: 2x Inverse: No Benchmark Index: S&P 500 VIX Short-Term Futures Index YTD Volume: $13.86 billion Like UVXY, this note also offers two times exposure to the S&P 500 VIX Short-Term Futures Index, but comes with an additional expense ratio of 0.70%. With an AUM of $342.8 million, the fund has traded in massive volumes of $ 13.86 billion and has surged 30.7% this year. VelocityShares 3x Inverse Crude Oil ETN (NYSEARCA: DWTI ) Leveraged Factor: 3x Inverse: Yes Benchmark Index: S&P GSCI Crude Oil Index Excess Return YTD Volume: $13.59 billion This product provides three times inverse exposure to the daily performance of the S&P GSCI Crude Oil Index Excess Return. With an AUM of $490.2 million, it has traded in massive volumes of $ 13.59 billion and has gained 18.4% this year. The ETN is a bit pricey as it charges 1.35% in annual fees. ProShares Ultra S&P 500 ETF (NYSEARCA: SSO ) Leveraged Factor: 2x Inverse: No Benchmark Index: S&P 500 Index YTD Volume: $13.30 billion This is the most popular and liquid ETF in the leveraged space with an AUM of $ 1.6 billion. The fund seeks to deliver twice the return of the S&P 500 Index, charging investors 0.89% in expense ratio. It has seen solid trading volumes of $ 13.30 billion so far this year and is down 9.6%. ProShares Short VIX Short-Term Futures ETF (NYSEARCA: SVXY ) Leveraged Factor: 1x Inverse: Yes Benchmark Index: S&P 500 VIX Short-Term Futures Index YTD Volume: $12.64 billion Like TVIX, this fund offers inverse exposure to the S&P 500 VIX Short-Term Futures Index, but with no leveraged factor. It charges 95 bps in annual fees per year from investors and has exchanged about $ 12.64 billion in shares this year. The fund has accumulated $487 million in its asset base and shed 23.7% so far this year. Direxion Daily Gold Miners Index Bull 3x Shares ETF (NYSEARCA: NUGT ) Leveraged Factor: 3x Inverse: No Benchmark Index: NYSE Arca GoldMiners Index YTD Volume: $11.04 billion This product seeks to deliver thrice the daily performance of the NYSE Arca Gold Miners Index, which consists of firms that operate globally in both developed and emerging markets, and are involved primarily in the exploration and production of gold. It is rich in AUM of $946 million and has seen solid trading volume of $ 1 1.04 billion so far in the year. Expense ratio comes in at 0.95%. The fund has delivered robust returns of 1 12. 1% year to date. ProShares UltraPro Short S&P 500 ETF (NYSEARCA: SPXU ) Leveraged Factor: 3x Inverse: Yes Benchmark Index: S&P 500 Index YTD Volume: $10.88 billion This fund provides three times inverse exposure to the S&P 500 Index. It has an expense ratio of 0.93% and has seen a massive trading volume of $ 10.88 billion so far this year. It has amassed $548.6 million in its asset base and gained 10.4% year to date. ProShares UltraPro Short QQQ ETF (NASDAQ: SQQQ ) Leveraged Factor: 3x Inverse: Yes Benchmark Index: NASDAQ 100 Index YTD Volume: $9.91 billion Investors embracing this product made huge profits from the declining NASDAQ 100 Index in a very short period. The product has exchanged $9.9 1 billion in average daily volume this year. It offers three times inverse exposure to the NASDAQ 100 Index, charging 0.95% in annual fees. The fund has an AUM of $378.2 million and has added 19.9% in the year-to-date time frame. ProShares UltraPro S&P 500 ETF (NYSEARCA: UPRO ) Leveraged Factor: 3x Inverse: No Benchmark Index: S&P 500 Index YTD Volume: $9.55 billion This product also tracks the S&P 500 index, but offers thrice the returns of the daily performance with a bit higher expense ratio (by 2 bps) than SPXU. It has an AUM of $856.9 million and year-to-date trading volume of $9.55 billion. UPRO is down over 14.9% so far this year. Direxion Daily Small Cap Bear 3x Shares ETF (NYSEARCA: TZA ) Leveraged Factor: 3x Inverse: Yes Benchmark Index: Russell 2000 Index YTD Volume: $9.41 billion This product provides triple leveraged inverse play to the small-cap Russell 2000 Index, charging 95 bps in fees and expenses. It has been able to manage $444.2 million in its asset base with year-to-date trading volume of $9.4 1 billion. TZA is down 3 1.6% so far this year. VelocityShares 3x Long Crude Oil ETN (NYSEARCA: UWTI ) Leveraged Factor: 3x Inverse: No Benchmark Index: S&P GSCI Crude Oil Index Excess Return YTD Volume: $8.69 billion This is the popular leveraged fund targeting the energy segment of the commodity market through WTI crude oil futures contracts. It seeks to deliver thrice the returns of the S&P GSCI Crude Oil Index Excess Return and has amassed $9 10 million in its asset base. Though the fund charges a higher fee of 1.35% per year, its total trading volume of $8.69 billion year to date is incredible. UWTI is down about 6 1.8% in the same time frame. ProShares Short S&P 500 ETF (NYSEARCA: SH ) Leveraged Factor: 1x Inverse: Yes Benchmark Index: S&P 500 Index YTD Volume: $8.20 billion This is the most popular inverse ETF with an AUM of $2.6 billion, providing inverse exposure to the daily performance of the S&P 500 index. It has seen a massive trading volume of $8.20 billion so far this year and has returned about 5.4%. Expense ratio came in at 0.90%. Direxion Daily S&P 500 Bull 3x Shares ETF (NYSEARCA: SPXL ) Leveraged Factor: 3x Inverse: No Benchmark Index: S&P 500 Index YTD Volume: $8.12 billion SPXL makes an excellent pick for investors seeking to make large profits from the soaring stock market in a very short span. The fund creates a triple leveraged long position in the S&P 500 Index while charging 95 bps in fees a year. It has $635.2 million in AUM and has traded in a solid total volume of $8. 12 billion so far this year. The ETF has lost about 18% year to date. Original post

8 Investing Lessons Learned From Fantasy Football

Summary The importance of analogies. Fantasy football’s lessons for lifetime profit. One last word. Everyone loves a colorful analogy. I suppose that is because a well-placed and entertaining analogy provides a more memorable imprint on the receiving brain than a simple statement does. I’m a big fan of melodrama, so it definitely appeals to me. To say “Seeing John Major govern the country is like watching Edward Scissorhands try to make balloon animals” (Simon Hoggart) is much more interesting than saying that you are very displeased with the inept manner in which John Major is running Great Britain (in the 90’s). Because, well, sometimes you just need to say something ridiculous to cut through the mundane. In general, I spend most of my down time reading articles and opinions about two things: finance and fantasy football. Musings on the interconnectivity between two very different things as I did while thinking about colorful analogies, I came to the realization that fantasy football and investing contain many common themes. I’ve been reading Matthew Berry’s Love/Hate (and everything else he writes – Thanks for all you do, TMR!) religiously for years on ESPN, so a few of these will reference some well-known nuggets of wisdom that he frequently drops. Unfortunately, 2015 fantasy football is ending for the year. Perhaps you brought home the bacon this year with a fantasy championship. Perhaps you drafted Eddie Lacy (the Kinder Morgan (NYSE: KMI ) of 2015) and never recovered. Hopefully these things will help with your drafting next year. I know they’ve been helpful to keep in mind while building my portfolio. Without further ado, here are eight lessons fantasy football teaches the investor: 1: Tune Out The Noise Perhaps the most important virtue of a stock picker is discipline. If you don’t have the conviction to stick with your analysis of a company in the face of setbacks, musings, downgrades, and Jim Cramer, you will hamstring yourself for future earnings. Similarly in fantasy football, there is always a lot of noise when it comes to matchups or weather. While these are important considerations, sometimes people will bench a stud because of a matchup (Julio Jones vs. Josh Norman last week), or other such things. You can’t let the overabundance of available information make you doubt yourself. This leads us straight to #2 … 2: Start Your Studs Everyone wants to make money fast. The allure of penny stocks is watching those big percentage gains during heady bull markets. The flip side of the coin is the important part: without concrete earnings prospects and realistic business models, penny stocks are 99.9% of the time just a roulette spin. Investing has risk involved, but long-term gains mean taking on educated risk based on strong fundamentals or viable prospects. Companies with long history of earnings growth and (as a bonus) uninterrupted dividends are your stock “studs”. Your studs are your guys that you can rely on to achieve above-average points week in and week out. When the playoffs come around, the most commonly given advice is “start your studs.” Those guys got you there, and you need to rely on them to continue to perform. Bortles, while not a high draft pick, was a stud, currently 5th among QBs in fantasy points and total yards, and behind only Cam Newton and Tom Brady in touchdowns. What’s in a name, anyway? 3: Don’t Overpay For A Name (click to enlarge) A name brand doesn’t guarantee safety by any means. I think a lot of investors learned that from Kinder Morgan this year, as the largest energy infrastructure and third-biggest outright energy company in the North America saw its stock price lose 61% in six months. Make sure you are doing your thorough due diligence and don’t get caught up in a name. I hate posting the picture above. As a Green Bay native exiled to D.C., putting Aaron Rodgers under that title wounds me to the bowels of my heart. The fact is, the Packer passing game has been a sore disappointment for awhile now, and playing Rodgers in your fantasy playoffs likely ended them prematurely for you. I know it did for my team Davante’s Inferno (on a related note I wish Davante Adams could catch footballs). 4: “Prove It” They say “Buy the rumor, sell the news”. This is the opposite of what a long-term investor ought to do. Realizing short-term gains in this manner can’t hold a candle to unlocking long-time value form a great company that grows earnings. As an added negative, if you buy the rumor and the news contradicts it, you’ll find yourself in a losing position very quickly. Buying and selling frequently is a great way to erode capital. In fantasy football, it’s good to give a player coming off an injury or big-game-out-of-nowhere a week on your bench to prove he is legit. Bishop Sankey, a popular sleeper last year who disappointed, scored 21 points in Week 1. He was likely picked up and immediately started by many. In Week 2 he scored a measly 4 points; in fact, the entire rest of the year combined he has 25 points. Alshon Jeffery (using a Bear to make up for the Rodgers above) never recovered from his injuries this year, and was a huge disappointment when he played. 5: Coaching Matters Every company has a CEO, a CFO, and a slew of other executives that guide the company according to the path they have in mind and the over the obstacles that arise. How those executives view the company and the emphasis that they place on the paths of revenue available to the company has a huge impact on future earnings. In addition, how they determine the best value to shareholders (i.e. buybacks, dividends, M&A, etc.) will impact you directly. A coaching change can have a huge impact on a franchise. With Andy Reid in town in Kansas City, you know that when Jamaal Charles goes down with an injury, he’ll plug in the next guy as a workhorse. Some coaches place more emphasis on certain positions (or the other side of the ball, even), so it is an overlooked point of vast import to know the head coach’s mindset when drafting members or claiming waivers for your fantasy football team. 6: Waivers = The “Bargain Bin” Stocks, like football players, have “floors” and “ceilings”, downside and upside. A well-balanced portfolio, accounting for risk appetite (usually correlated to one’s age), will contain some stocks that have “breakout” opportunities. Favorable macroeconomic tailwinds, business cycle gyrations, and friendly legislation can all raise the ceiling for a stock’s projected capital appreciation. Unfavorable elements can lower the floor, making downside movement more risky. The waiver wire makes or breaks championships. David Johnson was 2% drafted at the beginning of the year, was the player with the highest representation on ESPN championship teams (42.2% owned as reported by Keith Lipscomb). Waivers are where the bargains are; Waiver pickups can swing from a low ceiling, low floor to high ceiling high floor with just one injury to a key starter. 7: Diversify Your Positions Diversification is Investing 101. Spread your investments among different sectors/cap size companies/asset classes in order to maximize return and minimize risk. Some would say that if you can be disciplined while stocks are tanking over-diversification is “di-worsification”, leading to sluggish returns over time. Still, fear is a powerful agent, so having some green among the red can be a huge comfort, and can help one avoid panic-selling. In my opinion, a team should have a blend of top-tier players spread across different positions. I believe having one stud QB, RB, and WR is better than having three stud WRs in a standard league. For instance, taking two RBs in the first/second pick is generally viewed as a “safe play” on draft day. This year that would have absolutely killed you. 8: Buy Low, Sell High (click to enlarge) The most obvious advice in history, buy low/sell high is still the most important. Understanding valuations and being able to part with a stock you have come to love (because of how good to you it has been) is hard to do. Similarly, buying an unloved stock beaten down by news or rumors can be hard, as no one wants to try and catch a falling knife. Being able to judge what “low” and “high” mean in so many unique circumstances is a consummate skill. Every player that is lighting it up will normalize to the mean. Brady was a fantastic draft pick: a Hall of Fame quarterback with a Hall of Fame coach who was ticked off at bureaucratic debate and punishments levied. He had fire in his eyes, and that came out on the field. There came a time where his perceived value was higher than his average output, and that was the time to trade him away for someone with a lower perceived value but higher average value. It’s important to be active in your management, just as it is in stocks. Conclusion Lessons can be crossover between many different media. These eight lessons form a great platform of basic directives for investing, and as a bonus you have some things to think about for fantasy football next year as well! I hope everyone enjoyed the lighthearted article; its important change gears a bit at times. Please let me know how you liked it in the comments. Thanks to Seeking Alpha for letting me go nerdy on two different levels simultaneously.

5 ETF Ways To Keep Volatility At Bay

The Fed is poised to hike the benchmark interest rate in two weeks after almost a decade, oil prices are hitting fresh lows on supply glut and overvaluation concerns over the U.S. market are doing the rounds. Together, these aren’t creating the best backdrop to invest in the equity markets. Moreover, the slowdown in China and the eurozone, the recession in several emerging markets and a technical recession in the Japanese economy continue to cast a shadow over global growth. Plus, broader commodities are slouching, putting mining companies at risk. The sought-after investment broker Goldman Sachs expects weakness in the market next year, with the S&P 500 predicted to close out 2016 at 2,100. The U.S. index presently trades at 2,088, implying almost no change in gains in the coming 13 months. Among the top ETFs, investors have seen the S&P 500-based fund SPY adding about 1.4% and the Dow-based fund DIA losing about 0.3%. Only the tech-laden Nasdaq-based fund QQQ has advanced 11% so far this year (as of December 7, 2015). Higher interest rates post lift-off will result in a stronger greenback, which, in turn, curtailed the profit outlook of the companies. In Q3, earnings from the S&P 500 were down 2.4%, while revenues declined 3.9%. As per Zacks Earnings Trends , earnings for Q4 are projected to be down 6.5% on 3.4% lower revenues. Though the majority of the Fed’s lift-off move is priced in at the current level and the investing world is expecting a slow and small rate hike trajectory, as the U.S. economy is yet to attain the central bank’s inflation goal, a certain level of initial shocks are inevitable once the step is taken. This might lead many investors to seek refuge in low-risk products rather than sticking to highly volatile options and enduring the economic data and Fed-infused storm. In such a scenario, the low-volatility products could be intriguing choices for those who want to stay invested in domestic equities, but like the idea of focusing on minimum volatility. Low-volatility ETFs generally tend to offer positive risk-adjusted gains, though not huge. Investors should note that in down years like 2015, low-volatility products outperform the traditional benchmark. Over the long term as well, low-risk products are seen to surpass the high-risk securities. Below, we highlight five low-volatility ETFs and offer the key features of each so that you can find out which of them is best suited to look after your portfolio . PowerShares S&P 500 Low Volatility Portfolio ETF (NYSEARCA: SPLV ) This $67.1 million low-volatility ETF consists of the 100 stocks from the S&P 500 Index with the lowest realized volatility over the last one year. The fund is heavy on Financials (28.2%), followed by Consumer Staples (21.3%), Industrials (16.7%) and Healthcare (12.4%). It charges 25 bps in fees. SPLV is up over 2.2% so far this year (as of December 7, 2015), and has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook. PowerShares S&P MidCap Low Volatility ETF (NYSEARCA: XMLV ) This overlooked ETF looks to follow the S&P MidCap 400 Low Volatility Index. The product invests about $118.4 million in assets in 80 stocks. From a sector look, Financials make up half of the portfolio, followed by about 11.26% of assets invested in Industrials and 10.54% in Utilities. The portfolio has minimal company-specific concentration risk, with no company accounting for more than 1.71%. The product charges about 25 bps in fees. It is up 5.4% so far this year. iShares MSCI USA Minimum Volatility ETF (NYSEARCA: USMV ) USMV measures the performance of equity securities in the top 85% by market capitalization of U.S. equities that have lower absolute volatility. It has garnered an asset base of $6.85 billion. This fund is home to 171 securities in total, and assigns double-digit allocation to the Financials (21.2%), Healthcare (19.6%), Information Technology (15.71%) and Consumer Staples (14.43%) sectors. The product also has an edge over its peers when it comes to expenses, as it charges a fee of just 15 basis points annually, while it yields about 1.89%. It has delivered a return of over 4% so far this year. PowerShares S&P 500 ex-Rate Sensitive Low Volatility Portfolio ETF (NYSEARCA: XRLV ) This ETF has already amassed over $113 million in assets. It offers investors dual benefits. First, it is targeted at low-risk stocks, and second, it is insulated from the impending Fed rate hike, as it considers stocks which are less rate-sensitive. Holding 100 stocks in its basket, the fund dose not put more than 1.29% of the total in a single security. It is heavy on Financials (28.2%) and Industrials (21.5%). It charges 25 bps in fees. This product has returned 3.2% in the year-to-date frame (as of December 7, 2015). SPDR Russell 1000 Low Volatility Focus ETF (NYSEARCA: ONEV ) This brand-new ETF gives exposure to low-volatility investing in large cap equity securities. The 424-stock fund is heavy on Financial Services (20.2%), trailed by Consumer Discretionary (16.62%), Producer Durables (15.98%) and Consumer Staples (12.2%). It charges 20 bps in fees. Original Post