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)
4. Direxion Daily Metals & Mining Bull 2X Shares (NYSEARCA:MNM)
Leverage: 2x
YTD Return as of December 9: 10.27%
The Direxion Daily Metal Miners Bull 2X Shares (NYSEARCA:MNM) has gained 10.27% year to date, as of December 9, and is one of the best performing leveraged ETFs in 2022. The fund has outperformed the S&P 500 by over 28% so far. The fund is designed to amplify the daily performance of the S&P Metals & Mining Select Industry Index by 2 times. The fund has an expense ratio of 1.07% and $12.39 million in assets under management.
The Direxion Daily Metal Miners Bull 2X Shares (NYSEARCA:MNM) has 38 holdings concentrated in the materials, energy, and industrials segments. The fund has a top ten holdings concentration of 47.87%. Freeport-McMoRan Inc. (NYSE:FCX) is one of the top holdings of the fund. As of December 9, Freeport-McMoRan Inc. (NYSE:FCX) has gained 3% over the past six months and is trading at a PE multiple of 14x.
On November 23, Deutsche Bank analyst Abhi Agarwal raised his price target on Freeport-McMoRan Inc. (NYSE:FCX) to $35 from $30 and reiterated a Hold rating on the shares.
As of September 30, Ken Fisher’s Fisher Asset Management is the largest investor in Freeport-McMoran Inc. (NYSE:FCX) and has disclosed a position worth $1.45 billion in the company.
Here is what ClearBridge Investments had to say about Freeport-McMoRan Inc. (NYSE:FCX) in its third-quarter 2022 investor letter:
“Seeing better opportunities elsewhere in the materials sector, we exited our position in Ecolab and added to copper producer Freeport-McMoRan Inc. (NYSE:FCX), which supplies a much-needed resource for the energy transition, and specialty chemical company Linde (LIN), which has historically held onto pricing gains it has achieved following increases in energy costs. We think this pricing power should protect profitability during the acute inflationary phase and potentially lead to margin expansion when cost pressures abate. We think this pricing power should protect profitability during the acute inflationary phase and potentially lead to margin expansion when cost pressures abate.”
3. Direxion Daily S&P Oil & Gas Exp. & Prod. Bull 2X Shares (NYSEARCA:GUSH)
Leverage: 2x
YTD Return as of December 9: 53.19%
The Direxion Daily S&P Oil & Gas Exp. & Prod. Bull 2X Shares (NYSEARCA:GUSH) invests in stocks of companies operating in the energy, oil & gas, and gas exploration & production sectors. The fund aims to deliver 2x the daily returns of the S&P Oil & Gas Exploration & Production Select Industry Index. As of December 9, the fund has appreciated by 53.19% year to date, outperforming the S&P 500 by more than 70%, and is placed third among the best performing leveraged ETFs in 2022.
The Direxion Daily S&P Oil & Gas Exp. & Prod. Bull 2X Shares (NYSEARCA:GUSH) has $784.96 million in assets under management. The fund has 67 holdings and a top ten holdings concentration of 83.29%. One of the fund’s top holdings is Marathon Petroleum Corporation (NYSE:MPC). On November 3, Wells Fargo analyst Roger Read raised his price target on Marathon Petroleum Corporation (NYSE:MPC) to $131 from $116 and reiterated an Overweight rating on the shares.
As of December 9, Marathon Petroleum Corporation (NYSE:MPC) has gone up by 65.96% year to date and is offering a dividend yield of 2.75%. As of September 30, Elliott Management is the top investor in Marathon Petroleum Corporation (NYSE:MPC) and has stakes worth $1.09 billion.
2. ProShares Ultra Oil & Gas (NYSEARCA:DIG)
Leverage: 2x
YTD Return as of December 9: 100.25%
As of December 9, the ProShares Ultra Oil & Gas (NYSEARCA:DIG) has gained 100.25% year to date and is one of the best performing leveraged ETFs in 2022. The fund has outperformed the S&P 500 by over 118%. The fund aims to deliver twice the daily performance of the Dow Jones U.S. Oil & Gas Index and uses a full replication technique. The fund has an expense ratio of 0.95% and $173.36 million in assets under management.
The ProShares Ultra Oil & Gas (NYSEARCA:DIG) has 51 holdings and a top ten holdings concentration of 168.81%. One of the fund’s top holdings is oil giant Exxon Mobil Corporation (NYSE:XOM). As of September 30, GQG Partners is the dominant stockholder in the company and has a position worth $2.95 billion.
This November, Piper Sandler analyst Ryan Todd raised his price target on Exxon Mobil Corporation (NYSE:XOM) to $131 from $113 and maintained an Overweight rating on the shares.
As of December 9, Exxon Mobil Corporation (NYSE:XOM) has returned 65.58% to investors year to date and is trading at a PE multiple of 8x.
Here is what First Eagle Investments had to say about Exxon Mobil Corporation (NYSE:XOM) in its second-quarter 2022 investor letter:
“Integrated oil and gas giant Exxon Mobil performed well in the second quarter as continued high prices for energy products supported the stock. As the largest refiner in the US, the company has benefitted from wide “crack spreads,” or the margin between the cost of crude oil and the petroleum products extracted from it. Exxon continues to invest in refining capacity in the US, which industrywide has been in steady decline since 2019. We are pleased that Exxon has been using its strong cash flows to reduce debt and to return cash to shareholders through dividends and stock repurchases.”
1. Direxion Daily Energy Bull 2X Shares (NYSEARCA:ERX)
Leverage: 2x
YTD Return as of December 9: 103.58%
The Direxion Daily Energy Bull 2X Shares (NYSEARCA:ERX) aims to deliver 2 times the daily returns of the Energy Select Sector Index. The fund invests in energy stocks through derivatives such as futures and swaps. As of December 9, the fund has gained 103.58% year to date and is among the best performing leveraged ETFs in 2022. The fund has outperformed the S&P 500 by over 120% so far this year. The fund has an expense ratio of 0.95% and a yield of 2.82%. The fund pays out dividends on a quarterly basis.
The Direxion Daily Energy Bull 2X Shares (NYSEARCA:ERX) has 30 holdings and a top ten holdings concentration of 90.65%. The fund has $559.31 million in assets under management. One of the fund’s top ten holdings is Chevron Corporation (NYSE:CVX). As of December 9, Chevron Corporation (NYSE:CVX) has gained 42.05% year to date and is offering a dividend yield of 3.35%.
This November, Piper Sandler analyst Ryan Todd raised his price target on Chevron Corporation (NYSE:CVX) to $206 from $186 and maintained an Overweight rating on the shares.
As of September 30, Warren Buffett’s Berkshire Hathaway is the dominant shareholder in Chevron Corporation (NYSE:CVX) and has stakes worth $23.75 billion in the company.
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