2x Leveraged Long Emerging Markets ETF Products

Since the Emerging Markets are already "high beta" it is risky to compound this volatility by using leverage. However, if you are an active trader looking for extra risk exposure here is what is currently available. These types of Leveraged ETF products seek to replicate 2 or 3 times the DAILY performance of the underlying index and they reset each night after the close. Due to this unique characteristic they are not meant to be a long term buy and hold instrument.

EET - ProShares Ultra (Double) MSCI Emerging Markets ETF is designed to deliver 200% of the daily performance of the MSCI Emerging Markets Index. 

Annual Expense Ratio = .95% (95 Basis Points)

As of 10/18/2010 the net assets were only $33 Million and the average daily trading volume was only about 15,000 shares so this is not a very actively traded ETF.

This ETF has only been in existance since June 2nd 2009 so it has not been through a serious down turn yet, therefore the performance compared to EEM looks impressive.

You can see however, when the market sets back the performance advantage quickly evaporates.

EET 2X Emerging Markets ETF Since Inception VS EEM

Chart begins on EET first trading date - 6/2/2009

BRIL -  is a 2x Leveraged BRIC ETF that has under-performed EET since inception and only has about $5.3 million of net assets as of 10/18/2010 and an average trading volume of 2700 shares per day which is very illiquid.  So it's not a very viable trading vehicle.

Chart begins of the first trading day of BRIL  311/2010

3x Leveraged Emerging Markets ETF

 


EDC - Direxion Daily Emrg Mkts Bull 3X Shares is the obvious choice of traders based on an average daily volume that exceeds 2 million shares and $356 million in net assets as of 10/18/2010.  With an inception date of 12/17/2008 it came to market at a very volatile time.  It's mandate is to deliver daily investment results, before fees and expenses, of 300% of the price performance of the MSCI Emerging Markets index.

Annual Total Expense Ratio = .95%  (95 Basis Points)

EDC is by far the most liquid of the long leveraged ETFs and you can see in the chart below the tremendous volatility it offers.  After being down 60% in the first 3 months of trading it rallied sharply to over a 210% gain by the following summer.  Timing Is Everything with this leveraged ETF.

EDC Performance Since Inception VS. EEM

Chart begins on first trading day of EDC - 12/18/2009