Rally Hasn't Erased Losses for Bullish ETFs

TSC Ratings provides exclusive stock, ETF and mutual fund ratings and commentary based on award-winning, proprietary tools. Its "safety first" approach to investing aims to reduce risk while seeking solid outperformance on a total return basis.

This year's stock market rebound has renewed investor confidence, but exchange-traded funds that are bullish on equities have a long way to go to make up the past year's losses.

The S&P 500 index has advanced 10% in the past month, erasing a third of its decline in the past year. Even with double-digit returns, leveraged ETFs that bet on rising stocks have recouped only a fraction of their losses since May 2008.

Among the 50 leverage funds that are bullish, 20 have hit the market in the past year. The remaining 30 have lost 63%, on average, during that time.

Bullishly Leveraged ETFs Long Way From Recouping 1 Year Losses Fund (Ticker) Rating Total Return 1 Month Total Return 1 Year ProShares Ultra Real Estate (URE) E+ 19.81% -89.26% ProShares Ultra Financials (UYG) D- 26.54% -88.61% ProShares Ultra Basic Materials (UYM) E 27.22% -80.51% PowerShares DB Commodity Double Long ETN (DYY) U -2.57% -75.46% ProShares Ultra Oil & Gas (DIG) D 7.52% -75.05% ProShares Ultra Industrials (UXI) D 28.57% -70.80% ProShares Ultra Russell1000 Value (UVG) E 16.94% -70.78% ProShares Ultra Russell MidCap Value (UVU) E 23.96% -69.07% ProShares Ultra Russell MidCap Growth (UKW) D 22.00% -66.74% ProShares Ultra S&P500 (SSO) D 14.60% -65.71% Source: TheStreet.com Ratings & Bloomberg 5/5/2009

For the month that ended May 5, the ProShares Ultra Financials Fund (UYG - commentary - Trade Now) returned 27% with its 200% leveraged bet on rebounds in Bank of America (BAC - commentary - Trade Now) and Citigroup (C - commentary - Trade Now). However, the fund is still down 89% over the past year.

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Kevin Baker became the senior financial analyst for TSC Ratings upon the August 2006 acquisition of Weiss Ratings by TheStreet.com, covering mutual funds. He joined the Weiss Group in 1997 as a banking and brokerage analyst. In 1999, he created the Weiss Group's first ratings to gauge the level of risk in U.S. equities. Baker received a B.S. degree in management from Rensselaer Polytechnic Institute and an M.B.A. with a finance specialization from Nova Southeastern University.