As the first quarter of 2019 has come to a close, these 10 ETFs and ETNs have led this investment category in gains for the first three months of this year. As you can see from the list, exchange traded products tied to the price of oil were among the top performers, as crude prices surged on production cuts. Technology also fared well as tech stocks regained their footing after December's selloff. Here are the top ten ETFs and ETNs from the first quarter of 2019.
Top 10 Performing ETFs and ETNs, 1Q 2019
(YTD 2019 Gains and Annual Expense Ratios)
- VelocityShares 3x Long Crude Oil ETN (UWT), +95.73%, 1.50%
- United States 3x Oil Fund (OSOU), +94.29%, 1.43%
- UBS ETRACS ProShares Daily 3x Long Crude ETN (WTIU), +93.22%, 1.45%
- ProShares UltraPro 3x Crude Oil ETF (OILU), +92.72%, 1.03%
- Direxion Daily S&P Biotech Bull 3x Shares (LABU), +72.34%, 1.12%
- Direxion Daily Robotics, Artificial Intelligence & Automation Index Bull 3x Shares (UBOT), +61.19%, 1.49%
- Direxion Daily Technology Bull 3x Shares (TECL), +59.20%, 1.08%
- Direxion Daily Homebuilders & Supplies Bull 3x Shares (NAIL), +58.72%, 0.99%
- Direxion Daily Semiconductor Bull 3x Shares (SOXL), +58.08%, 0.99%
- ProShares Ultra Bloomberg Crude Oil (UCO), +57.74%, 1.27%
Significance For Investors
All the funds listed above use leverage to magnify their exposure to the daily price moves in their underlying investments. For the first 9 funds listed above, this is 3x exposure. For the last one, the UCO fund, it is 2x exposure. However, leveraged ETFs and ETNs generally are suitable only for short-term tactical trading, not as buy-and-hold long term investments. Over longer periods than a single day, returns can vary greatly from 3x or 2x the return of the underlying investments.
- UWT: Index of front-month WTI crude oil futures contracts
- OSOU: Front-month WTI crude oil futures contracts
- WTIU: Index of WTI crude oil futures contracts
- OILU: Index of WTI crude oil futures contracts
- LABU: S&P Biotech Select Industry Index
- UBOT: Indxx Global Robotics & Artificial Intelligence Thematic Index
- TECL: S&P Technology Select Sector Index
- NAIL: Dow Jones U.S. Select Home Construction Index
- SOXL: PHLX Semiconductor Stock Index
- UCO: Index of WTI crude oil futures contracts
Top Index Components
For the stock indexes listed above, here are their top three components as of March 29, 2019.
S&P Biotech Select Industry Index: Ligand Pharmaceutical Inc. (LGND), Immunomedics Inc. (IMMU), Ionis Pharmaceuticals Inc. (IONS), per S&P Dow Jones Indices.
Indxx Global Robotics & Artificial Intelligence Thematic Index: Intuitive Surgical Inc. (ISRG), Keyence Corp. (6861: Tokyo), Mitsubishi Electric Corp. (6503: Tokyo), per etfdb.com.
S&P Technology Select Sector Index: Microsoft Corp. (MSFT), Apple Inc. (AAPL), Visa Inc. (V), per S&P Dow Jones Indices.
Dow Jones U.S. Select Home Construction Index: D.R. Horton Inc. (DHI), Lennar Corp. (LEN), NVR Inc. (NVR), per eftdb.com.
PHLX Semiconductor Stock Index: Nvidia Corp. (NVDA), Broadcom Inc. (AVGO), Qualcomm Inc. (QCOM), per iShares.
As noted above, these leveraged investment products may not be suitable as long term holdings. Moreover, the five ETFs and ETNs listed above that are linked to the price of WTI crude oil were beneficiaries of a 29% increase in its spot price during the first quarter, per macrotrends.net. Given widespread indications of U.S. and global economic deceleration, betting on continued price gains in oil may be especially risky.