Hottest ETFs For The Week Ended July 19, 2009

Each week, I like to publish the past week’s hottest ETFs to share some new trends and niche ETFs out there and give investors some new ideas. For this week, and the past several for that matter, Tech has been completely outperforming the broader market and the while the triple leveraged ETF instrument lends itself to massive gains during such a run, there are many risks that aren’t totally intuitive that investors need to consider as well given daily rebalancing.

Here are 4 top performing ETFs from last week:

TYH (TYH) - Direxion Daily Technology Bull 3X Shares - Up 30% - This 3X Tech ETF has been a stalwart member of the hottest ETFs updates, as Tech has outperformed most other sectors in US equities. Year to date, the Nasdaq is up 16% vs. a 4% gain for the S&P500 and this ETF is now up 64% on the year and 200% since the March lows. The top 3 underlying holdings are Apple, Cisco and Google.

FAS (FAS) - Direxion Financial Bull 3X Shares - Up 27% - You can always count on having either FAS (triple long) or FAZ (triple short) Financials on the list given the volatility in the Financial sector. Financials have fared quite well given strong results from some of the major investment firms and improved sentiment from influential analysts (Meredith Whitney’s glowing review of Goldman Sachs’ prospects).

EDC (EDC) - Direxion 3X Emerging Markets - Up 26% - With equities rallying globally and the higher Beta that the emerging market bourses carry, not only did they take it on the chin last year on the way down, but during the recovery, they are rocketing back up at a much faster pace than US equities. EDC is up over 15 times the S&P500 during the 2009 YTD period at 74% vs. 4% for the S&P500.

ERX (ERX) -Direxion Daily Energy Bull 3X - Up 26% - This ETF seeks to return 300% of the daily performance of the Russell 1000 Energy Index. While oil prices had retreated briefly, it appears as though they’re headed back toward a natural pivot point of around $70 and in the near term, ERX could serve as a hedge for another summer runup in oil and of course, gas prices. However, given the longer term loss in value in leveraged ETFs I pointed out earlier, there are several lower risk/lower cost options out there to hedge energy prices for the retail investor/consumer.

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