5 Best Leveraged ETFs of the First Quarter of 2024 (2024)

After a rough start to 2024 on overstretched valuations and easing of rate cut bets, Wall Street showed strong momentum. In fact, U.S. stocks are on track to post strong gains for the first quarter.

The S&P 500 is headed for its best first quarter since 2019 and the 12th strongest first quarter since 1945, having gained about 10% so far. In a historic move that signals optimism for the financial markets, the S&P 500 Index surpassed 5,200 last week, following the Fed’s latest signal to cut interest rates (read: Leveraged ETFs to Ride on S&P's New 5,200 Milestone).

Meanwhile, the Dow Jones is on track for its best first-quarter gain since 2021, rising 5.5%, and the Nasdaq Composite Index is up about 9.3%. Fed rate cut bets, stronger earnings, and the continued AI boom continue to fuel the rally in the stock market.

This has resulted in increased demand for leveraged ETFs as investors seek to register big gains in a short span. We highlight a bunch of the best-performing leveraged equity ETFs from different corners of the market that are leaders in their segments for the first quarter. These include 2x Bitcoin Strategy ETF BITX, ProShares Ultra Semiconductors USD, AdvisorShares MSOS 2x Daily ETF MSOX, MicroSectors U.S. Big Oil Index 3X Leveraged ETN NRGU and BMO REX MicroSectors FANG+ Index 3X Leveraged ETN FNGU. These funds will continue to be investors’ darlings, provided the sentiments remain bullish.

In the latest meeting, the Fed maintained its interest rates steady in a range of 5.25%-5.50% and signaled three rate cuts this year, citing expanding economic activity and easing but elevated inflation. Lower interest rates generally lead to reduced borrowing costs, helping businesses to expand their operations more easily and resulting in increased profitability. This, in turn, will stimulate economic growth and provide a boost to the stock market.

Leveraged ETFs provide multiple exposures (2X or 3X) to the daily performance of the underlying index. These funds employ various investment strategies, such as the use of swaps, futures contracts and other derivative instruments to accomplish their objectives. Due to their compounding effect, investors can enjoy higher returns in a short period, provided the trend remains a friend.

Since most of these ETFs seek to attain their goals on a daily basis, their performances could vary significantly from the performance of their underlying index or benchmark over a longer period compared with a shorter period (such as weeks, months or years) due to their compounding effect (see: all Leveraged Equity ETFs here).

Investors should also note that leveraged ETFs involve a great deal of risk than traditional funds. They are often more costly and can be less tax-efficient, as they can see capital gains through the use of swaps and other derivative instruments.

2x Bitcoin Strategy ETF (BITX) – Up 120%

2x Bitcoin Strategy ETF is a leveraged Bitcoin-linked ETF that seeks to provide daily investment results that correspond generally to twice the performance of the S&P CME Bitcoin Futures Daily Roll Index. It has AUM of $1.2 billion and an expense ratio of 1.85%. 2x Bitcoin Strategy ETF trades in an average daily volume of 3 million shares (read: Spot Bitcoin ETFs Smash Records With $1B Inflows).

ProShares Ultra Semiconductors (USD) – Up 81.9%

ProShares Ultra Semiconductors offers two times exposure to the daily performance of the Dow Jones U.S. Semiconductors Index. It has gathered $876.6 million in its asset base and charges 95 bps in fees per year from investors. USD trades in an average daily volume of 404,000 shares.

AdvisorShares MSOS 2x Daily ETF (MSOX) – Up 78.7%

AdvisorShares MSOS 2x Daily ETF is designed for sophisticated investors looking to gain magnified exposure to the U.S. cannabis sector. It offers daily investment results that correspond to two times the daily performance of the AdvisorShares Pure US Cannabis ETF. AdvisorShares MSOS 2x Daily ETF has accumulated $86.6 million in its asset base and trades in a volume of 1.6 million shares per day on average. It charges 1.13% in annual fees (read: Cannabis ETFs Jump on Imminent Rescheduling News).

MicroSectors U.S. Big Oil Index 3X Leveraged ETN (NRGU) – Up 43.6%

MicroSectors U.S. Big Oil Index 3X Leveraged ETN provides three times leveraged exposure to the Solactive MicroSectors U.S. Big Oil Index, which is equal-dollar weighted and provides exposure to the 10 largest U.S. energy and oil companies. MicroSectors U.S. Big Oil Index 3X Leveraged ETN has been able to manage $2.2 billion in its asset base while trading in an average daily volume of 45,000 shares. Its expense ratio is 0.95%.

BMO REX MicroSectors FANG+ Index 3X Leveraged ETN (FNGU) – Up 42.3%

BMO REX MicroSectors FANG+ Index 3X Leveraged ETN seeks to offer three times leveraged exposure to the NYSE FANG Index. The Index includes 10 highly liquid stocks that represent industry leaders across today’s tech and Internet/media companies. BMO REX MicroSectors FANG+ Index 3X Leveraged ETN charges 95 bps in annual fees and trades in an average daily volume of around 2 million shares. It has accumulated $4.4 billion in its asset base.