Leveraged ETFs are under fire for creating volatility in the stock markets, especially in the last hours of trading. The story goes that traders move through large positions in leveraged exchange-traded funds which then permeate through prices for individual securities.

The argument certainly has plenty of merit – leveraged funds do pass on volatility into small corners of the marketplace. However, it is important to note that all funds, not just levered funds, have this effect.

How Leveraged ETFs Work

Leveraged ETFs are usually set to double or even triple the daily change in the underlying index. If one were to purchase the Direxion Daily Financial Bull 3X Shares ETF (FAS), the investor would stand to earn or lose an amount equal to three times the change in the underlying financial securities contained in the index.

Naturally, ETF issuers and sponsors balance an ETF’s basket in a way that aligns with investment interest. If investors redeemed hundreds of thousands of leveraged ETF shares, the issuer must deliver the instruments used to mimic the underlying portfolio, or sell a proportional amount of the portfolio to deliver the cash equivalent.

Leveraged ETFs are more complicated than simple and straight-forward ETFs that do not provide for leveraging returns. However, this does not mean leveraged ETFs play a bigger part in volatility than any other exchange-traded fund.

Risk-on and Risk-off Trading Strategies

Exchange-traded funds of all types make the risk-on, and risk-off trades far more available to traders who might not otherwise have the opportunity to play the macro-market view. While I can afford to trade the SPY index as an individual, it is beyond my capacity to trade all 500 stocks in the S&P500 whenever I want to mimic the S&P500’s performance. The trading costs are simply too high.

Thanks to the exploding growth in ETF issuance and daily volume, I can trade the risk-on, risk-off trade as if I were an institutional firm through an ETF. This gives me access to the market in a way that I, as an individual, might never have enjoyed previously.

The risk-on, risk-off trade explained

Markets go through cycles spanning periods of several weeks and, in some cases, several months. During these periods, traders are usually either risk-on (buying more speculative investments like equity in fast-growing firms) or risk-off (buying boring blue-chip stocks or fixed-income investments like US treasuries.)

Global macroeconomics typically fuel risk appetite in the market. During the European banking fiasco, for example, traders took risk off the table, selling equity holdings in favor of safer stocks and bonds.

Traders and investors who held exchange-traded funds find the liquidity of exchange-traded funds to be valuable as a tool to reallocate assets. One could sell tens of millions of dollars in the SPY ETF in mere minutes, for example.

But that same volume and liquidity does not always exist in the equities that make up the SPY ETF. It certainly does not exist in all the stocks that make up the Russell 2000 Small Cap Index, or the exchange-traded funds that mimic the index’s performance, like the iShares Russell 2000 (IWM) or the leveraged variety, Direxion Daily Small Cap Bull 3x Shares (TNA).

Efficiently Inefficient Markets

Exchange-traded funds, leveraged or straight ETFs, are wildly liquid to a level never before seen in the financial markets. However, companies that make up the indexes can be horrendously illiquid. It took me mere moments to find one stock, Aceto Corp (ACET), which sees average daily volume of less than 100,000 shares at a share price of just under $8 per share.

You simply cannot move large amounts of money in and out of Aceto Corp very quickly. You can move in and out of the Russell 2000 Index very easily – almost too easily! Any creation or redemption of Russell 2000 Index ETF shares require a transfer of Aceto Corp stock from one entity to another.

The disconnect between the volume for ETF “packages” of stocks and the volume for individual stocks creates frictional volatility. A lack of liquidity in individual equities is neither good nor bad; it’s a function of a marketplace that works quite well. Furthermore, volatility is the friend of both the buyer and seller; it allows for investors to sell for a higher price to ETF traders, and buyers an opportunity to purchase at a discount created by ETF sellers.

When the risk-on, risk-off trade becomes most active, these small cap stocks are the most wildly affected as they are mostly illiquid, and also considered to be at the forefront of risk appetite or avoidance. One would typically sell small caps to take risk off the table, and purchase small caps to insert risk back into a well-balanced portfolio.

For examples of exploiting market inefficiencies, see these examples of gold pairs trades, silver pairs trades, and this strange market timing phenomena.

The bottomline: If it isn’t broken, don’t fix it. Exchange-traded funds do enable and make more visible the volatility in the marketplace. But don’t blame the messenger – ETFs pass on the volatility from another source. To blame ETFs for market volatility in recent months would be to give a pass to the European Union’s many budget problems, which simply are not a by-product of ETF trading on a financial market 5,000 miles away from European shores.

©2012 ETF Base. All Rights Reserved.

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I had the pleasure of using OptionsHouse as a broker for well over a year. As a light volume options trader and investor, I found their products and services to be some of the best. Heavy option traders would benefit even more from an OptionsHouse account.

OptionsHouse Commissions and Fees

Where OptionsHouse stands out from the competition is in their commission and fee model. The company was one of the first to target high-volume options traders with low, per-contract trading fees.

Options Commissions

OptionsHouse offers two different solutions for options traders:

1. Trade up to five contracts for $5, with each additional contract costing only $1.
2. Trade as many contracts as you want at $8.50 flat plus $.15 per contract.

Options traders should see quite quickly how the second selection is very favorable for high-volume, out-of-the-money orders. An investor would pay only $158.50 to trade 1000 contracts, which is the equivalent of 100,000 shares of stock. OptionsHouse will process trades of up to 4000 contracts. Larger transactions would require two trades.

Other brokers only begin to compete with OptionsHouse on price once trading volumes run in excess of 100,000 option contracts per month.

Stock and Mutual Fund Commissions

OptionsHouse isn’t necessarily a go-to shop for stock trading, but the company does compete with favorable trading costs. OptionsHouse commissions for stocks and exchange-traded funds are set to a tiny $3.95 commission per trade.

Stocks priced at less than $2 per share, as well as companies that are not options eligible require a $.005 (half-cent) surcharge per share, per trade. OptionsHouse processes trades with a maximum of 50,000 shares per trade.

Mutual fund investors will want to look elsewhere. The company charges a hefty $9.95 commission for trading mutual funds. Most brokerage companies now waive this fee for clients. OptionsHouse, which caters more to the active investor, does not subsidize mutual fund trading costs to win over customers.

Freebies

OptionsHouse does offer a few freebies for their clients. The company provides all of the following for free:

1. Streaming quotes – Streaming services can cost up to $25 per month with some discount stock brokers.
2. DRIPs – Set up an automatic dividend reinvesting plan for free. (The company will not allow for partial share purchases, however.)
3. Free IRA brokerage accounts – IRA accounts are not met with a monthly or annual surcharge. (Special Offer: 100 FREE Trades for new IRA accounts)
4. Free check writing services – I never used this service; however, traders have the ability to draw checks straight from their account. The first 40 checks are free. Additional checks are $10 for 100, which is surprisingly less expensive than my credit union!

Special Offers

The Trading Platform

OptionsHouse differentiates itself with its own proprietary trading platform. While it is unique to OptionsHouse, it isn’t all that different from other, web-based platforms at other online brokerages. The platform can be heavily customized, allowing for a variety of different views for streaming quotes, and multiple options chains.

You can tell the company really caters to option traders from a quick glance of the platform. A drop-down menu allows you to place option trades based on varying strategies including credit and debit spreads, covered calls, straddles, time spreads, and more.

Speed defines the platform. Frequent and fast traders will appreciate the fact that there are at least 5 ways to do just about every command. Look to the top of the platform to enter a trade. Or, select a single contract off the streaming options chain quotes to enter an order immediately. There is a learning curve to the platform and its quick functions, but traders who can use Microsoft Word should be able to manage this trading platform.

Bottomline Review

OptionsHouse has always been a firm for the active trader. As the company competes for a larger cross-section of the retail trading marketplace, it continues to lower trading commissions. The company also earns high marks from reputable financial publications like Smart Money and Barrons – I don’t think it a year has gone by that the firm hasn’t improved on its rankings.

Mutual fund traders should go elsewhere. But for those looking for low-cost stock and option trades, OptionsHouse blows away the competition. A $1,000 minimum initial investment to open an account is one of the lowest in the market for online discount brokers.

To find out about all the special sign-up offers, visit OptionsHouse.com.

©2012 ETF Base. All Rights Reserved.

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If the past few months have not been a lesson in strategy over tactics, I don’t know what is. While the mainstream media has pounded viewers with negative news, US equities have been on a complete tear, putting the NASDAQ at highs not seen for the past decade. Just year-to-date, the NASDAQ (QQQ) is up 12% and the S&P500 (SPY) is up 8%. Markets seem to be “defying logic”. Just as my kid yells at the Wii that “the game cheats” when his Lego Batman is killed, retail investors are yelling that the market should be imploding with the world in such chaos. Greece is completely insolvent, as is much of the EU, the Middle East is in revolt with the replacement governments LESS stable than the dictators that preceded them, the US debt continues to balloon and we’re on the verge of an outright way with Iran. How could the US stock market possibly be rallying?

This is one of life’s great mysteries. On one hand, you might say that all these developments are old news and were priced in….or they just don’t matter. On the other hand, you could say that these negative developments have been counteracted with more favorable developments in corporate earnings, a business-oriented frontrunner GOP challenger to Obama, or any other number of things. There’s certainly something to be said for a lack of other places TO go. With the Fed’s zero interest rate policy in place through 2014, this is certainly pushing money into equities as well as the junk bond rally that saw record inflows last week as well.

The bottom line is that no one investor can possibly digest all this information, let alone make predictions on how the chaotic market movements relevant to each individual piece of information will be reflected in market direction.

Lessons Learned: Stick To Your Strategy

Similar to the people (we all know at least one) who pulled all their money out of their 401(k)s and trading accounts during the market crash of 2008-2009, there will always be people who are fearful when others are fearful and finally become greedy when others are too. They sell low, buy high, and sit out the rallies. Rather than trying to outsmart the market and the machinations of global events, investors really need to understand what their strategy is, why they’re employing it, and stick to it. That’s not to say the same strategy is appropriate for everyone. Some choose to focus on broad diversification across several asset classes, some have various options strategies, alternative investments or a focus on low-cost and free ETF trading to match index returns from an “efficient market theory” standpoint. Whatever the strategy is, more times than not, when retail investors deviate due to emotional reactions and fear, they end up as net losers.

Disclosure: No positions in any ETFs cited herein.

©2012 ETF Base. All Rights Reserved.

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Exchange-traded fund investors use ETFs for any number of reasons. Many use them for their simplicity, others know that low ETF fees bring about higher, long-run returns. What many investors seem to forget, however, are the unique risks that come with underlying portfolios that make up any ETF.

Now that commodities are on fire – silver, gold, and even oil have surged since from 2008 financial crisis lows – investors see commodities as a valuable asset class. While ETFs offer exposure to commodities inexpensively and conveniently, exchange-traded commodities funds have a unique risk: contango.

Contango’s Source

To understand contango, an investor must first understand how commodities funds operate. There are a few different ways that an exchange-traded fund can buy exposure to a particular asset class:

1. Physical holdings – Most commonly found in precious metals funds, ETF issuers accumulate stockpiles of gold, silver, and now even copper to back a fund’s investment interest. This can be costly for less valuable commodities, since storing many million barrels of oil is far more expensive than storing several million dollars of gold.
2. Futures and derivatives – Futures and derivatives can be used to mimic a physical position in a particular commodity. A fund may buy several different long- and short-dated futures positions to simulate the ownership and possession of a particular commodity.

Investors have typically favored physical holdings when the economics make sense. In the case where the economics of owning large scale depositories of a particular investment do not make sense, investors usually turn to funds backed by futures and derivatives.

Both the United States Natural Gas Fund (UNG) and iPath S&P 500 VIX Short-Term Futures ETN (VXX) funds are backed by futures and derivatives. Natural gas is expensive to store in the form of physical holdings – not to mention a massive fire hazard! The volatility index is a derivative of options pricing, so there is no way to buy a VIX to hold it in your hand like a commodity or share of stock. Aligning your investment interest with the VIX requires futures, derivatives, or a combination of both.

Contango Explained

Contango exists when the price of a particular commodity, index, or exposure to any investment vehicle via derivatives is priced higher in the future than in the present. Oil, for example, might be priced at $100 in the current future contract. The next month, known as the front month, might have a price of $102 per barrel, a 2% increase over the month before.

Contango is found in virtually every market for several reasons. First, one must consider the time value of money – if prices are assumed to stay constant, the market still prices in the opportunity cost of capital. Secondly, investors find longer-dated futures to be more valuable because there exists more time for their call to be proven right. If you believe oil will rise to $110, you would want to make sure that you have futures far enough into the future that the markets can have time to “catch up” to your prediction.

Now, when it comes to commodities ETFs and some derivatives-based funds, contango can be a real investment killer.

Using our example above where oil is priced $100 today and $102 in the front-month, we would lose some $2 per barrel every time the contracts are rolled over. That is, if I own 10 barrels of oil at $100 and want to roll over my position, I’ll have to sell my $100 oil to buy $102 oil to extend my position.

Over time, the cost of contango quickly adds up. Investors slowly see the value and size of their position shrink as they own smaller and smaller amounts of a commodity or derivative position with each passing month.

Devastating Effects

The United Natural Gas Fund (UNG) is a perfect example of the devastating effects of contango. From February 2009 to February 2012, the fund lost 85.3% of its value. Meanwhile, the price of natural gas dropped only 50%.

That is to say that the fund would have lost roughly 50% of its value if it had purchased natural gas and stored the gas itself. However, because the fund rolled countless positions over each month (many of which were front-run by traders to push up prices before rollover) the UNG fund dropped 85.3% in the same period.

The short version of this long story is that $10,000 invested in natural gas in 2009 is worth roughly $5000 today. The same $10,000 invested in UNG 3 years ago is worth only $1,470.

Beat Contango

There is only one way to beat the contango for most commodities and derivative-based ETFs – opt for an ETN. Because ETNs are notes, which aren’t backed by real positions on the market, there is no rollover cost each month and thus no contango. However, a new risk does present itself – counterparty risk – the risk that the issuer goes bankrupt and cannot guarantee the value of the note.

When it comes to counterparty risk vs. contango, you’ll simply have to pick your poison!

Written by JT at MoneyMamba.

Disclosure: The author does not have any positions in the above securities mentioned in the article.

©2012 ETF Base. All Rights Reserved.

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In 2010 one brave analyst took to 60 minutes to give deliver a warning message: municipalities are broke. Meredith Whitney made a very controversial call, declaring state and local governments a poor place to invest. In particular, she noted her expectations for the future of the municipal bond market which included hundreds of billions of dollars in defaults within the next five years.

A full year later, Meredith might want to rethink her prediction.

How Munis Performed in 2011

See the chart below of three popular municipal bond ETFs (more on municipal bond investing options and the benefits of triple tax free investing):

This chart includes:

• iShares S&P National Municipal Bond ETF (MUB) – Invested primarily in intermediate term issues, MUB looks for general obligation and sales tax revenue bonds for investor protection. The fund is invested largely in bonds with an A-rating or better by credit ratings agencies. MUB yields 2.86% to investors
• SDPR Nuveen Barclays Municipal Bond ETF (TFI) – Barclay’s created this lesser diversified, rules based index for municipal bond investors. The ETF owns bonds with Aa3/A- ratings or better from at least two of the three major ratings agencies including Moody’s, Standard & Poors’, and Fitch. TFI yields 3.19% to investors.
• iShares S&P Short-Term National AMT-Free ETF (SUB) – This fund was included for the fact that it sticks to the short end of the yield curve. The SUB ETF holds 25% of assets in short-term securities with maturity dates less than 1 year in the future. The remaining holdings are kept in bonds with less than 5 years to maturity. SUB yields 1.28% per year at the current price.

Where Meredith Missed the Muni Market

Meredith missed horribly in her prediction. A quick look from the chart shows us the outsized capital gains for muni investors in the year-ago period. Atop this gain, however, investors also have very reasonable tax-free distributions.

So where did Meredith go wrong?

Here’s just a few of the things she missed:

1. Europe – You cannot have a conversation about the debt markets without addressing the international markets. Given that the PIIGS nations (an acronym which includes Portugal, Ireland, Italy, Greece and Spain) all face budget and debt woes, Americans naturally find the town next door to be a better investment than European Sovereigns.
2. Bernanke – Any investor knows not to fight the Fed.  We’re finally seeing the strategy of shorting Treasuries paying off, but it’s been fighting an uphill battle. Meredith Whitney made her call for troubled municipalities to default in December, just one month after another $600 billion quantitative easing program (dubbed QE2) rolled out to drive down yields. Given the Fed’s capacity to deliver on lower interest rates (and thus higher bond values) one must question Whitney’s timing.
3. Bottoming Real Estate Markets – Municipal bonds are very much tied to the fate of the real estate market. General obligation bonds backed by the full faith and credit of a municipality are the most directly related to property taxes. Luckily for state governments, US housing prices moderated to drop only slightly for the full year, helped in part by a low interest rate environment and improving spreads between real estate cash flows and carrying costs. Trends look better for 2012, as a number of builders exit the commercial markets to begin building new residential real estate to grab yield.

Fed Backstops Municipal Default

Most municipalities finance their obligations with long-term, callable bonds. Callable bonds are obviously favorable to the municipality and detrimental to investors in periods of falling interest rates.

Meredith Whitney may be right to say that municipalities have long term financing problems. It is true that most every government does eventually spend beyond its ability to finance ever-growing obligations. Municipalities face rising obligations to baby boomer workers through pensions and other investments. Certainly, pensions aren’t meeting their “hurdle rate” to make good on future promises.

However, the same environment that crushes pension performance is enabling municipalities to fund their most pressing needs in the here and now. Call provisions allow municipalities to call higher yielding bonds issued over the last several years with new issues at lower and lower rates.

Do municipalities have a funding problem? Yes, and it would be a lie to deny the concern. However, Whitney’s 5-year call is far too pessimistic – every municipality enjoys much lower borrowing costs today than it previously paid even five years ago.

Dear Meredith, don’t fight the FED.

Written by: JT, who blogs about anything finance at MoneyMamba.

Disclosure: No position in any ETFs reviewed in this article

©2012 ETF Base. All Rights Reserved.

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I caught an article over a SeekingAlpha quoting the Financial Times in highlighting that perhaps the ETF market has become saturated.  I’ve been saying for some time that the new issues coming out seemingly weekly are becoming more inane and bizarre by the issue.  Much seems to be more about marketing and getting a trendy niche in your name than actually representing a true underlying sector (Social Media ETF? Nano ETF?  Please).  Also, using catchy ticker symbols to compete with similarly structured ETFs that may have lower fees isn’t doing investors any good (TAN, MOO, etc.).  Investors need to do their research and understand how well a “themed” ETF actually represents the sector they may assume it does based on a carefully selected name.  Curious on your thoughts on the state of ETFs for 2012.

With that off my chest, here’s a shoutout to some great blogs that hosted my content during the past few weeks.  Check out these carnivals for tons of investing articles from around the blogosphere:

Self-Directed Investing Carnival

Carnival of Passive Investing

Carnival of Wealth

Carnival of Financial Comraderie

Totally Money Carnival

©2012 ETF Base. All Rights Reserved.

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I came across an interesting article on SeekingAlpha where the author suggests a strategy for exploiting the high yields of the Dogs of the Dow (I recently wrote on the 2012 Dogs of the Dow) mixed with selling long-dated options (LEAPS) on those positions. Using Dow stocks also tends to minimize the risk of outright collapse in a stock as well, as they tend to be a bit more stable than smaller, less recognized companies. While it’s a lot to manage all those positions and options contracts, the beauty of selling covered call options is that you’re capturing the premium as it drops off over time since most options expire worthless. And if the stock runs and the shares get called, you had the gain on the underlying stock AND the premium on the option.

The author used a methodology whereby he sold LEAPS out in 2013 and stated what the returns would be should shares remain FLAT or HIT THE STRIKE PRICE during that time. The returns look good, especially considering the low interest rate environment we’re in and the volatility stocks will likely face in the future. But there’s the rub. His analysis considers what happens if all shares are FLAT or MOVE UP, but not what happens if shares decline. When I model out such scenarios, I like to set up a spreadsheet and model the full range of prices both up and down. While the option premium and dividends can certainly blunt downward moves in share prices, you can still end up with a sizable loss, especially across such a long time horizon.

Interested in Your Thoughts – Would You Try This Strategy?

Have You Ever Sold Covered Calls?

©2012 ETF Base. All Rights Reserved.

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I came across an interesting article on SeekingAlpha where the author suggests a strategy for exploiting the high yields of the Dogs of the Dow (I recently wrote on the 2012 Dogs of the Dow) mixed with selling long-dated options (LEAPS) on those positions. Using Dow stocks also tends to minimize the risk of outright collapse in a stock as well, as they tend to be a bit more stable than smaller, less recognized companies. While it’s a lot to manage all those positions and options contracts, the beauty of selling covered call options is that you’re capturing the premium as it drops off over time since most options expire worthless. And if the stock runs and the shares get called, you had the gain on the underlying stock AND the premium on the option.

The author used a methodology whereby he sold LEAPS out in 2013 and stated what the returns would be should shares remain FLAT or HIT THE STRIKE PRICE during that time. The returns look good, especially considering the low interest rate environment we’re in and the volatility stocks will likely face in the future. But there’s the rub. His analysis considers what happens if all shares are FLAT or MOVE UP, but not what happens if shares decline. When I model out such scenarios, I like to set up a spreadsheet and model the full range of prices both up and down. While the option premium and dividends can certainly blunt downward moves in share prices, you can still end up with a sizable loss, especially across such a long time horizon.

Interested in Your Thoughts – Would You Try This Strategy?

Have You Ever Sold Covered Calls?

©2012 ETF Base. All Rights Reserved.

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I came across an interesting article on SeekingAlpha where the author suggests a strategy for exploiting the high yields of the Dogs of the Dow (I recently wrote on the 2012 Dogs of the Dow) mixed with selling long-dated options (LEAPS) on those positions. Using Dow stocks also tends to minimize the risk of outright collapse in a stock as well, as they tend to be a bit more stable than smaller, less recognized companies. While it’s a lot to manage all those positions and options contracts, the beauty of selling covered call options is that you’re capturing the premium as it drops off over time since most options expire worthless. And if the stock runs and the shares get called, you had the gain on the underlying stock AND the premium on the option.

The author used a methodology whereby he sold LEAPS out in 2013 and stated what the returns would be should shares remain FLAT or HIT THE STRIKE PRICE during that time. The returns look good, especially considering the low interest rate environment we’re in and the volatility stocks will likely face in the future. But there’s the rub. His analysis considers what happens if all shares are FLAT or MOVE UP, but not what happens if shares decline. When I model out such scenarios, I like to set up a spreadsheet and model the full range of prices both up and down. While the option premium and dividends can certainly blunt downward moves in share prices, you can still end up with a sizable loss, especially across such a long time horizon.

Interested in Your Thoughts – Would You Try This Strategy?

Have You Ever Sold Covered Calls?

©2012 ETF Base. All Rights Reserved.

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With 2011 wrapping up, we saw US indices close roughly flat on the year (slight gain on the Dow and a huge move for the Dogs of the Dow especially, at 17%), but global markets swooned, especially those in the developing world and Europe.  It shouldn’t come as a major surprise then, that the major story for 2011 in ETFs was that of the Treasury ETF.  While a great strategy historically has been to short Treasuries with out of the money calls, even that strategy failed on certain occasions when the underlying ETFs moved too quickly and positions had to be covered.  Other trends and stories will be evident below in the Top 10 for each class – both leveraged and non-leveraged ETFs.  I wanted to include non-leveraged since it gives a more true picture of the actual top performing sectors, as not all sectors have a 3X leverage equivalent and most leveraged ETFs go to zero eventually, further distorting real gains from the underlying sectors.

Top 10 Non-Leveraged ETFs of 2011

TICKER /2011 /NAME

ZROZ 58.85 % PIMCO 25+ Yr Zero Cpn U.S. Trsy Idx ETF
EDV 56.14 % Vanguard Extended Dur Treas Idx Instl
DTYL 46.16 % iPath US Treasury 10-year Bull ETN
DLBL 42.87 % iPath US Treasury Long Bond Bull ETN
TLT 33.56 % iShares Barclays 20+ Year Treas Bond
TLO 29.4 % SPDR Barclays Capital Long Term Treasury
VGLT 29.14 % Vanguard Long-Term Govt Bond Idx Instl
FLAT 26.76 % iPath US Treasury Flattener ETN
LTPZ 25.06 % PIMCO 15+ Year US TIPS Index ETF
BABS 24.02 % SPDR Nuveen Barclays Cap Build Amer Bd

Top 10 Leveraged ETFs of 2011

TICKER /2011 /NAME
LBND 117.85 % PowerShares DB 3x Lng 25+ Yr Trsy Bd ETN
TMF 109.08 % Direxion Daily 20+ Yr Trsy Bull 3X Shrs
INDZ 78.72 % Direxion Daily India Bear 3X Shares
UBT 72.77 % ProShares Ultra 20+ Year Treasury
TYD 48.45 % Direxion Daily 7-10 Yr Trsy Bull 3X Shrs
BOM 41.84 % PowerShares DB Base Metals Dble Shrt ETN
UPW 35.21 % ProShares Ultra Utilities
MLPL 31.89 % UBS E-TRACS 2x Long Alerian MLP Infr ETN
BZQ 25.83 % ProShares UltraShort MSCI Brazil
RXL 17.82 % ProShares Ultra Health Care

Admittedly, the non-leveraged top ETF list is pretty boring to look at – it’s all Treasuries!  But that was the story of 2011 – the flight to safety.  For a large part of 2011, it was a flight to gold as well, but as I warned in September in 5 Reasons to Avoid Gold ETFs (when gold was appreciably higher than it is now in spite of Russia, Iran, Egypt and Europe worsening), that story may well have been played out regardless of what happens in the near-term.

Disclosure: No position in any ETFs covered in this article

©2012 ETF Base. All Rights Reserved.

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