In this article, we will discuss the 5 best performing leveraged ETFs in 2022. If you want to explore similar ETFs, you can read 10 Best Performing Leveraged ETFs in 2022.
5. Direxion Daily Aerospace & Defense Bull 3X Shares (NYSEARCA:DFEN)
Leverage: 3x
YTD Return as of December 9: 2.56%
The Direxion Daily Aerospace & Defense Bull 3X Shares (NYSEARCA:DFEN) invests in stocks of companies operating in the industrials, capital goods, aerospace & defense sectors, through derivatives such as futures and swaps. The fund aims to enhance the daily returns of the Dow Jones U.S. Select Aerospace & Defense Index by 3x. The fund has an expense ratio of 0.96% and a yield of 1.99%. As of December 9, the fund has gained 2.56% year to date, outperforming the S&P 500 by roughly 20%, and is placed high on our list of the best performing leveraged ETFs in 2022.
The Direxion Daily Aerospace & Defense Bull 3X Shares (NYSEARCA:DFEN) has $202.56 million in assets under management and has a 40 holdings. The fund has a top ten holdings concentration of 101.06%. One of the fund’s top holdings is Lockheed Martin Corporation (NYSE:LMT). As of December 9, the stock has gone up by 36.64% year to date and is offering a forward dividend yield of 2.48%.
This December, Citi analyst Jason Gursky started coverage of Lockheed Martin Corporation (NYSE:LMT) with a Buy rating and a $546 price target.
As of September 30, GQG Partners is the largest investor in Lockheed Martin Corporation (NYSE:LMT) and has disclosed a stake worth $641 million in the company.
Here is what Vltava Fund had to say about Lockheed Martin Corporation (NYSE:LMT) in its third-quarter 2022 investor letter:
“LMT is one of the world’s largest aerospace and defence companies. The war in Ukraine has reminded investors and the wider public just how important these companies are. The aerospace and defence industry in the USA is an established oligopoly. This means that a few large firms play a dominant role. While collectively they comprise an oligopoly, individually they often have monopoly positions in particular narrower segments. Their main counterparty is the US government, a key customer in what is known as a monopsonist position. This is a rather unusual situation, but one that is very advantageous for companies such as LMT.
LMT has a strong and long-term sustainable competitive advantage ensuing from the fact that its products are developed and manufactured at an extremely high level of technology and complexity, its development and contract cycles are measured in decades, and the costs for the government to switch to alternative suppliers are high. Moreover, part of the production is classified as secret, which further takes the wind out of the sails of potential competitors. This results in a very high return on capital and admittedly a slowly but steadily growing business.
In most NATO countries, which are LMT’s customers, defence outlays are based upon the size of GDP. This is currently growing very fast in nominal terms due to inflation in most countries. A number of countries have also announced significant increases in defence budgets, whether it be Germany, which aims to get to the NATO-agreed 2% of GDP, or Poland, which wants to spend more than twice as much on defence…” (Click here to see the full text)
Here is what Vltava Fund has to say about Lockheed Martin Corporation (NYSE:LMT) in its Q3 2022 investor letter:
“LMT is one of the world’s largest aerospace and defence companies. The war in Ukraine has reminded investors and the wider public just how important these companies are. The aerospace and defence industry in the USA is an established oligopoly. This means that a few large firms play a dominant role. While collectively they comprise an oligopoly, individually they often have monopoly positions in particular narrower segments. Their main counterparty is the US government, a key customer in what is known as a monopsonist position. This is a rather unusual situation, but one that is very advantageous for companies such as LMT.
LMT has a strong and long-term sustainable competitive advantage ensuing from the fact that its products are developed and manufactured at an extremely high level of technology and complexity, its development and contract cycles are measured in decades, and the costs for the government to switch to alternative suppliers are high. Moreover, part of the production is classified as secret, which further takes the wind out of the sails of potential competitors. This results in a very high return on capital and admittedly a slowly but steadily growing business.
In most NATO countries, which are LMT’s customers, defence outlays are based upon the size of GDP. This is currently growing very fast in nominal terms due to inflation in most countries. A number of countries have also announced significant increases in defence budgets, whether it be Germany, which aims to get to the NATO-agreed 2% of GDP, or Poland, which wants to spend more than twice as much on defence…” (Click here to see the full text)
