5 Best-Performing Leveraged ETFs of Q1

Wall Street witnessed wild swings in the first quarter, while international markets experienced a smooth ride. The ongoing trade uncertainty under the new administration has raised concerns about growing inflation and a slowing economy in the United States, benefiting the international markets.

This has resulted in increased demand for leveraged ETFs in many corners of the broad investing world, as these fetch outsized returns on quick market turns in a short span. We have highlighted a bunch of the best-performing leveraged ETFs that have been leading since the start of the year. These include MicroSectors Gold Miners 3X Leveraged ETN GDXU, Direxion Daily FTSE China Bull 3X Shares YINN, Direxion Daily FTSE Europe Bull 3x Shares EURL, Direxion Daily MSCI Mexico Bull 3X Shares MEXX and Direxion Daily Aerospace & Defense Bull 3X Shares DFEN.

These funds seek to register big gains in a short span and will continue their strong trend, at least in the near term, provided the sentiments remain bullish. Leveraged ETFs provide multiple exposures (2X or 3X) to the daily performance of the underlying index. These funds employ various investment strategies, such as swaps, futures contracts and other derivative instruments, to accomplish their objectives.

International Vs. U.S. Market

After years of underperformance, international stocks outperformed their U.S. counterparts and have had the best start to a year so far this century. Inflationary pressure and concerns over the new administration’s tariffs shifted investors' interest toward international stocks. In fact, investors are growing more bullish on global equities, buoyed by solid European fundamentals and China’s recovery.

Additionally, the valuations between U.S. and international stocks have reached historically wide gaps, making international stocks attractive and compelling investors to bet on them (read: 5 International ETFs Beating the S&P 500 in 2025).

International markets appear better insulated from the ongoing trade tensions. While the United States faces tariff battles on several fronts, many foreign economies primarily navigate a single trade opponent—the United States—simplifying their risk exposure.

The rounds of tariffs will hurt U.S. consumers, driving up the prices of goods, thereby curtailing spending. It will further impact the worldwide economy and corporate profits, particularly for big U.S. exporters. All these will continue to weigh on the stock market and can disrupt global supply chains. The risk-off trade has increased the appeal for safe-haven avenues like gold or a low-risk play.

ETFs in Focus  

MicroSectors Gold Miners 3X Leveraged ETN (GDXU) – Up 108.8%

Strong safe-haven demand has been bolstering gold prices. Gold miners often outperform physical gold during bull markets due to their operating leverage. A small increase in gold prices can significantly boost miners’ profits. 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 $466.6 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 624,000 shares (read: Gold ETFs at All-Time High as Bullion Surges Past $3000).

Direxion Daily FTSE China Bull 3X Shares (YINN) – Up 55.1%

President Donald Trump’s imposition of fresh tariffs on Chinese goods hasn't deterred investors from betting on China's tech sector and stimulus efforts. YINN provides three times exposure to the FTSE China 50 Index, which consists of the 50 largest and most liquid public Chinese companies currently trading on the Hong Kong Stock Exchange. It charges an annual fee of 93 bps and has AUM of $1.6 billion. The fund trades in a heavy volume of around 6 million shares.

Direxion Daily FTSE Europe Bull 3x Shares (EURL) – Up 41.5%

The appeal for European ETFs was fueled by expectations of fiscal stimulus and soaring defense spending. Direxion Daily FTSE Europe Bull 3x Shares seeks to deliver three times the performance of the FTSE Developed Europe All Cap Index. It charges 95 bps in annual fees and trades in an average daily volume of 75,000 shares. Direxion Daily FTSE Europe Bull 3x Shares has amassed $41.6 million in its asset base (read: Europe ETFs Beating S&P 500 in 2025: Here's How).

Direxion Daily MSCI Mexico Bull 3X Shares (MEXX) - Up 33.4%

Mexican stocks have been buoyed by the nearshoring boom. As U.S. companies seek to diversify supply chains away from China, Mexico has become a prime beneficiary, thanks to its proximity to the U.S., favorable trade agreements, and competitive labor costs. Direxion Daily MSCI Mexico Bull 3X Shares creates a three-times long position in the MSCI Mexico IMI 25/50 Index, charging 95 bps in annual fees. It has an AUM of $20.4 million and trades in an average daily volume of 204,000 shares.

Direxion Daily Aerospace & Defense Bull 3X Shares (DFEN) – Up 26.6%

Defense companies have been among the best-performing stocks in global markets this year. The unprecedented military spending spree by European leaders has fueled a blistering rally in defense stocks across the board. Direxion Daily Aerospace & Defense Bull 3X Shares creates three times leveraged long position in the Dow Jones U.S. Select Aerospace & Defense Index. It charges an annual fee of 92 bps and trades in a good average daily volume of about 185,000 shares. Direxion Daily Aerospace & Defense Bull 3X Shares has AUM of $175 million.

A 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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This article originally published on Zacks Investment Research (zacks.com).

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