2025 will likely bring many unknown variables into play for investors, including ongoing geopolitical tensions around the world and a flurry of new policies and priorities from the US government during Donald Trump’s second administration. On the one hand, the defensive play may appeal to investors wary of the potential impact on markets from escalating unrest in the Middle East, an isolationist approach to U.S. economic development and more.
However, for those with an appetite for risk, the broad uncertainty of the investment landscape in 2025 could present the potential for big plays and potentially even rewards. In this environment, niche exchange-traded funds (ETFs) can allow investors to precisely target a specific part of the market. However, keep in mind that these funds tend to be subject to higher risk than most other ETFs, even during periods of relative market stability.
Powerful market access with built-in downside protection
Direxion HCM Tactical Enhanced US ETF Today
Direxion HCM Tactical Enhanced US ETF
(As of 12/27/2024 4:31 PM ET)
- 52 week range
- $25.18
▼
$39.52
- Dividend yield
- 0.79%
- Assets under management
- $449.31 million
Direxion HCM Tactical US ETF NYSEARCA:HCMT is an actively managed fund of funds that uses an unusual approach: HCMT either invests in U.S. equities with leverage of up to 200% of net assets or uses a non-leveraged approach, all in cash or cash equivalents. The decision is made in accordance with the investment model of the adviser Howard Capital Management, which attempts to evaluate which of two approaches may be more profitable. HCMT can switch between these two modalities as often as daily.
This fund represents an unusual take on the approach often taken by leveraged ETFs, which can be described as “all in all the time.” Typical 2x or 3x leveraged funds choose an investment approach and stick with it—investors typically trade in or out of the fund on a daily basis to avoid skewing long-term results when the fund goes to zero.
With HCMT, investors have a fund that can take a very aggressive, leveraged approach or a passive, defensive strategy, depending on the market. This may make investors more likely to hold assets here for a longer period than with other leveraged funds, although downside risks may still remain. Still, the fund’s approach to managing downside risk is useful, especially since most leveraged funds provide no protection at all.
Ethereum Focus with Risk Management
Ethereum ETF Bit Strategy Today
Ethereum Bit Strategy ETF
(As of 12/27/2024 4:30 PM ET)
- 52 week range
- $28.33
▼
$55.61
Like HCMT, Ethereum’s bit strategy ETF. NYSEARCA: GONE designed to fluctuate between a more aggressive, higher-risk investment strategy and a more stable, lower-risk investment strategy, depending on market conditions. While HCMT focuses on stocks and takes a broad approach to looking at the S&P 500 and NASDAQ-100, AETH looks at the cryptocurrency space and Ethereum in particular.
Although ether is not as widespread as Bitcoin tokens, the Ethereum network remains a favorite among cryptocurrency developers looking to launch apps, NFTs or tokens using smart contracts. This makes Ethereum a likely center of activity whenever major events occur in the cryptocurrency space.
AETH is fully invested in CME Ether futures during periods of market growth. Then during downturns or periods of volatility, he switches to a conservative approach based on US Treasuries. Similar to HCMT, this rotational strategy means that AETH is attempting to take advantage of a high-risk, speculative environment and offer some protection against downside risk. Like many other cryptocurrency ETFs, AETH does not invest directly in ether—for some, the less direct option of investing through futures provides an attractive distance from the volatile spot market.
ETH has small assets under management: less than $11 million as of December 26, 2024. However, the defensive option should appeal to buy-and-hold investors who are less concerned with day-to-day trading liquidity.
Benefit from a booming economy
MicroSectors Travel 3x Leveraged ETN Today
MicroSectors Travel ETN with 3x Leverage
(As of 12/27/2024 4:31 PM ET)
- 52 week range
- US$24.45
▼
$71.01
- Dividend yield
- 0.00%
- Assets under management
- $9.68 million
MicroSectors Travel ETN with 3x Leverage NYSEARCA: FLU provides investors with an interesting way to make a bullish bet in a strong economy. The fund’s goal is to achieve three times daily exposure to an index of stocks participating in the travel industry. Since consumers are likely to increase their spending on non-business travel when the economy is doing well, this fund gives investors a targeted way to capitalize on times when customers have more cash in their pockets.
FLYU investors ultimately pay for their leveraged risk as the fund’s expense ratio is 0.95%. It also has a very small asset base and trading volumes as of end-December 2024, which could pose a challenge for investors looking to move in and out of a FLYU position on a daily basis to match the risk reset.
Before you consider the MicroSectors Travel 3x Leveraged ETN, you should hear this.
MarketBeat tracks Wall Street’s top-rated and best-performing analysts daily and the stocks they recommend to their clients. MarketBeat identified five stocks that top analysts are quietly whispering to their clients to buy now, before the broader market catches on… and the MicroSectors Travel 3x Leveraged ETN wasn’t on the list.
While MicroSectors Travel 3x Leveraged ETN currently has a Hold rating among analysts, the top-rated analysts think these five stocks are Outperform Buys.
View five stocks here
Click the link below and we’ll send you MarketBeat’s guide to investing in 5G and which 5G stocks show the best promise.
Get this free report