April was one of the wildest months in recent history. The S&P 500 and Dow Jones wrapped up the third consecutive month in the red, marking the longest monthly losing streak since 2023. The Nasdaq Composite Index, which entered a bear market in early April, managed to eke out a gain of 0.8%, snapping its two-month losing run.
The uncertain environment resulted in increased demand for leveraged and inverse-leveraged ETFs as these fetch outsized returns on quick market turns in a short span. We have highlighted some of the best-performing leveraged or inverse leveraged ETFs that gained handsomely last month. These include 2x Long VIX Futures ETF UVIX, MicroSectors U.S. Big Oil Index -3X Inverse Leveraged ETN NRGD, MicroSectors Gold Miners 3X Leveraged ETN GDXU, Direxion Daily S&P Biotech Bear 3x Shares LABD and Direxion Daily Small Cap Bear 3x Shares TZA. The funds will remain investors’ darlings, provided sentiments remain the same.
Leveraged and inverse-leveraged ETFs either create a leveraged long/short position, an inverse long/short position, or a leveraged inverse long/short position in the underlying index through the use of swaps, options, futures contracts or other financial instruments. Due to their compounding effect, investors can enjoy higher returns in a short period, provided the trend remains a friend (see: all the Inverse Equity ETFs here).
What Happened in April?
The market took a steep dive in early April, following the announcement of the so-called "Liberation Day" tariffs. Trump had announced a 10% universal tariff on imports, coupled with additional country-specific tariffs, most notably a 145% levy on Chinese goods. The Dow Jones plummeted over 4,000 points in two days, recording a 9.5% decline. The S&P 500 and Nasdaq experienced similar drops, with the Nasdaq entering bear market territory. The aggressive duties raised concerns over inflation and economic growth (read: Volatility ETFs Roar on Trump's New Tariff Woes).
However, markets rebounded later in the month as inflation data showed signs of cooling and trade tensions eased. In fact, the Dow Jones and the S&P 500 registered their seventh consecutive winning session on April 30.
Trump softened his stance on tariffs, raising hopes of a resolution of the trade conflict. At a White House press conference last week, Trump called the current 145% reciprocal tariffs "too high" and said they would "come down substantially." According to several reports, China might suspend its 125% tariff on some U.S. goods, which boosted market sentiment.
The latest GDP data again took a toll on investors’ sentiment. The U.S. economy contracted by 0.3% in the first quarter of 2025, marking the first decline since early 2022. This downturn was largely attributed to a surge in imports as businesses accelerated purchases ahead of newly implemented tariffs by President Donald Trump on countries including Canada, Mexico, and China.
ETFs in Focus
2x Long VIX Futures ETF (UVIX) – Up 87.1%
2x Long VIX Futures ETF seeks twice the performance of the Long VIX Futures Index, charging investors 1.77% in annual fees. The Index measures the daily performance of a theoretical portfolio of first and second-month VIX futures contracts that are rolled daily. UVIX has amassed $141.3 million in its asset base and trades in an average daily volume of 8 million shares.
MicroSectors U.S. Big Oil Index -3X Inverse Leveraged ETN (NRGD) – Up 42.7%
MicroSectors U.S. Big Oil Index -3X Inverse Leveraged ETN offers three times inverse 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 Inverse Leveraged ETN has accumulated $4.7 million in its asset base. It charges 95 bps in annual fees and trades in an average daily volume of about 3,000 shares.
MicroSectors Gold Miners 3X Leveraged ETN (GDXU) – Up 37.8%
MicroSectors Gold Miners 3X Leveraged ETN seeks to deliver three times (3X or 300%) the performance of the S-Network MicroSectors Gold Miners Index. It has amassed $576.7 million in its asset base and charges 95 bps in annual fees. MicroSectors Gold Miners 3X Leveraged ETN trades in an average daily volume of 887,000 shares (read: Gold Dazzles: Amplify Returns With Leveraged ETFs).
Direxion Daily S&P Biotech Bear 3x Shares seeks to deliver three times the inverse daily performance of the S&P Biotechnology Select Industry Index, which includes domestic companies from the biotechnology industry. Direxion Daily S&P Biotech Bear 3x Shares has amassed $41.8 million in its asset base and has an average daily volume of around 11 million shares. It charges investors 95 bps in annual fees.
Direxion Daily Small Cap Bear 3x Shares (TZA) – Up 27.8%
Direxion Daily Small Cap Bear 3x Shares provides three times inverse exposure to the Russell 2000 Index, charging 90 bps in fees and expenses. It has been able to manage $245.1 million in its asset base with a heavy average daily volume of 27 million shares.
Caveat!
These funds run the risk of huge losses compared to traditional funds in fluctuating or seesawing markets. Further, their performance could vary significantly from the actual performance of their underlying index over a longer period when compared to a shorter period (such as weeks or months).
Investors should note that these products are suitable only for short-term traders, as these are rebalanced on a daily basis. Further, liquidity can be a big problem as it can make the products more expensive than they appear.
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