What are the most volatile ETFs to trade?
Here are the most volatile ETFs for traders to watch.
How to start trading ETFs
An exchange traded fund (ETF) is a financial instrument that tracks the performance of a basket of assets. The underlying asset that determines the value and performance of the ETF can vary and allows investors to take a position on everything from a group of equities, forex or commodities.
Suggested steps to start trading ETFs:
- Understand what an ETF is and how to trade them
- You can read more about how to choose the right ETF here
- Start searching for the ideal one using the IG ETF Screener
You can also take a position on ETFs over the long term by using our investment service. Keep your costs down, with zero commission on US shares, and just £3 on UK shares.
Day trading ETFs: strategies for day trading
ETFs are also popular among day traders that buy and sell financial instruments within a single trading day. They close out positions before the end of each day and start again the following day.
The idea is to take advantage of small price movements as you are limited to one day. With this in mind, day traders will be particularly interested in finding the most volatile ETFs available as this maximises the potential returns on offer. You can read more about day trading and the best strategies for beginners here.
Most volatile leveraged ETFs
Leveraged ETFs will always be among the most volatile ETFs in the market. This is because they use financial derivatives and/or debt to amplify the performance of the underlying asset, some as much as 5x. This could mean a £1 movement in the FTSE 100 would translate to a £5 movement – up or down – to an ETF that is tracking it. This adds to both the risk and the reward on offer.
Below is a table of the top 20 most volatile leveraged ETFs based on the standard deviation of the share price for the previous 360 days to 19 May 2020. There are some common themes to point out, such as the number tracking the price of natural gas or WTI crude oil.
Energy prices have been on a roller coaster ride of late thanks to the coronavirus wiping out demand in an already over-supplied market, and oil prices crashed to new lows. The other most volatile ETFs have been tracking the Euro STOXX 50, German DAX and the S&P 500.
It is also worth highlighting inverse ETFs. Inverse ETFs are funds that move in the opposite direction to the underlying asset. So any movement that the asset makes, the inverse ETF does the opposite. This means there are ETFs available for both those who want to go long or short, and why there are some similar ETFs in the below table with some tracking the ‘daily long’ performance and others tracking the ‘daily short’.
|Code||Name||Currency||Long or short?||Volatility - 360 days|
|SG20||SG NATURAL GAS X5 DAILY LONG||GBP||Long||377.70%|
|SG21||SG NATURAL GAS X5 DAILY SHORT||GBP||Short||255.60%|
|SG27||SG NATURAL GAS X5 DAILY SHORT||USD||Long||247.20%|
|3OIS||WT WTI CRUDE 3X DLY SHORT||EUR||Short||244.50%|
|SG29||SG WTI X5 DAILY SHORT||GBP||Long||239.80%|
|SG26||SG NATURAL GAS X5 DAILY LONG||USD||Long||238.10%|
|SG35||SG WTI X5 DAILY SHORT||USD||Short||235.10%|
|SG28||SG WTI X5 DAILY LONG||GBP||Long||180.80%|
|SG50||SG SILVER X5 DAILY LONG||GBP||Long||175.20%|
|SG34||SG WTI X5 DAILY LONG||USD||Long||169.60%|
|SG72||SG EURO STOXX X5 DAILY LONG||EUR||Long||156.30%|
|SG72||SG EURO STOXX X5 DAILY LONG||GBP||Long||152.40%|
|SG51||SG SILVER X5 DAILY SHORT||GBP||Short||144.10%|
|SG76||SG DAX X5 DAILY LONG||GBP||Long||143.50%|
|SG25||SG NATURAL GAS X3 DAILY SHORT||USD||Short||142.00%|
|SG24||SG NATURAL GAS X3 DAILY LONG||USD||Long||140.00%|
|3NGS||WT NATURAL GAS 3X DLY SHORT||USD||Short||137.10%|
|3NGL||WT NATURAL GAS 3X DLY LVRGD||USD||Long||136.30%|
|SG77||SG DAX X5 DAILY SHORT||GBP||Short||136.20%|
|SG92||SG S&P X5 DAILY LONG||USD||Long||134.40%|
Most volatile non-leveraged ETFs
Unlike leveraged ETFs that try to amplify the performance of their underlying assets, non-leveraged ETFs simply try to track the performance of the underlying asset as closely as possible.
This means they are not as volatile as leveraged ones, but they can still prove volatile enough to provide trading opportunities – and at a lower risk than leveraged ETFs. The below table is based on the standard deviation of the share price for the previous 360 days.
Again, ETFs tracking energy commodities have been among the most volatile, including ones like the SPDR World Energy ETF that follows the performance of major oil companies or infrastructure providers. The VanEck Junior Gold Miners ETF, which tracks small gold mining stocks, also makes the list as do two ETFs tracking the price of palladium.
Outside of that, there are some country-specific ETFs to watch, such as the iShares MSCI South Africa ETF that tracks South African equities and the HSBC MSCI Brazil UCITS that does the same in Brazil.
|Code||Name||Currency||Volatility - 360 days|
|WNRG||SPDR WORLD ENERGY||USD||71.60%|
|PCRD||WT WTI CRUDE - GBP DLY HDG||GBP||62.60%|
|CRUD||WT WTI CRUDE OIL||USD||62.50%|
|UGAS||WT WTI GASOLINE||USD||62.10%|
|MLPI||L&G US ENERGY INFRASTR MLP||USD||59.00%|
|OILW||WT WTI CRUDE OIL 2MTH||USD||57.70%|
|MLPD||INVESCO MORNINGSTAR MLP DIST||USD||54.90%|
|MLPS||INVESCO MORNINGSTAR MLP ACC||USD||54.60%|
|OILB||WT BRENT CRUDE OIL 1MTH||USD||53.90%|
|PBRT||WT BRENT CRUDE - GBP DLY HDG||GBP||51.60%|
|BRNT||WT BRENT CRUDE OIL||USD||50.90%|
|OIL3||UBS ETC ON CMCI WTI 3M USD||USD||50.40%|
|SRSA||ISHARES MSCI SOUTH AFRICA||USD||49.70%|
|HMBR||HSBC MSCI BRAZIL UCITS ETF||USD||47.90%|
|GDXJ||VANECK JR. GOLD MINERS ETF||USD||46.90%|
|SPAL||INVESCO PHYSICAL PALLADIUM||USD||46.70%|
|HOGS||WT LEAN HOGS||USD||46.60%|
|PHPD||WT PHYSICAL PALLADIUM||USD||46.60%|
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