Is there a 5x ETF?
The objective of the ETP Securities is to provide 5 times the value of the daily performance of the SPDR S&P 500 ETF Trust Exchange Traded Fund, net of fees and expenses. The ETP securities seek to pursue the 5x Long US 5.
SPY - Performance Comparison. In the year-to-date period, SPXL achieves a 14.33% return, which is significantly higher than SPY's 6.27% return. Over the past 10 years, SPXL has outperformed SPY with an annualized return of 22.99%, while SPY has yielded a comparatively lower 12.48% annualized return.
BMO has launched the first quadruple leveraged ETN fund that tracks the S&P 500. The fund will trade under the ticker symbol "XXXX" and seeks to generate four time the S&P 500's return on a daily basis. The launch come as bullishness rise among investors and Wall Street predicts more gains to come in 2024.
The TQQQ is a 3x leveraged ETF based on the QQQ (a Nasdaq-100 Index ETF). Because it is leveraged, it uses derivatives contracts to amplify its returns based on how the index performs.
An ETF that is leveraged 3x seeks to return three times the return of the index or other benchmark that it tracks. A 3x S&P 500 index ETF, for instance, would return +3% if the S&P rose by 1%.
This ETF offers 3x daily long leverage to the broad-based S&P 500 Index, making it a powerful tool for investors with a bullish short-term outlook for U.S. large cap stocks. Investors should note that leverage on SPXL resets on a daily basis, which results in compounding of returns when held for multiple periods.
The fund is highly volatile and not suitable for risk-averse investors, but may be useful for those with a short-term bullish market bias. However, SPXL can also be considered by some for long-term investing with the potential of market-beating returns. It's critical to make note of potential risks, however.
The 10X S&P 500 ETF tracks the S&P 500® Index. The S&P 500® Index was created in 1957 as the first U.S. Market-Cap-weighted index, and tracks 500 of the top companies in the U.S. economy.
Because they rebalance daily, leveraged ETFs usually never lose all of their value. They can, however, fall toward zero over time. If a leveraged ETF approaches zero, its manager typically liquidates its assets and pays out all remaining holders in cash.
The Direxion Daily Junior Gold Miners Index Bull 3x Shares (JNUG) and the Direxion Daily Junior Gold Miners Index Bear 3x Shares (JDST) are the two most volatile exchange-traded funds of all. Each has a one-year volatility reading of about 170.
Why don t people invest in TQQQ?
Historical data shows that leveraged ETFs can experience significant losses during market downturns, and negative returns can accumulate over time. Indicators suggest that a bubble may be forming in the Nasdaq-100 and that a recession could be on the horizon, making investing in TQQQ too risky.
The performance of an investment option is often one of the most critical aspects investors consider. The performance of these two ETFs will be highly dependent on the performance of the information technology sector. If information technology significantly outperforms other sectors, then QQQ will outperform VOO.
For investors seeking an alternative to QQQ's mega-cap exposure, the Invesco S&P 500 Top 50 ETF (XLG) is an excellent option. XLG tracks the S&P 500 Top 50 Index, which, like QQQ, is heavily weighted towards top-tier tech and consumer stocks.
The largest Leveraged ETF is the MicroSectors FANG+ Index 3X Leveraged ETN FNGU with $4.58B in assets. In the last trailing year, the best-performing Leveraged ETF was NVDL at 461.04%. The most recent ETF launched in the Leveraged space was the ProShares Ultra Bitcoin ETF BITU on 04/02/24.
ProShares UltraPro QQQ is the most popular and liquid ETF in the leveraged space, with AUM of $21.9 billion and an average daily volume of 67.3 million shares a day.
Leveraged ETFs decay due to the compounding effect of daily returns, volatility of the market and the cost of leverage. The volatility drag of leveraged ETFs means that losses in the ETF can be magnified over time and they are not suitable for long-term investments.
Nearly all leveraged ETFs come with a prominent warning in their prospectus: they are not designed for long-term holding. The combination of leverage, market volatility, and an unfavorable sequence of returns can lead to disastrous outcomes.
| Symbol | ETF Name | # of Holdings |
|---|---|---|
| SSO | ProShares Ultra S&P 500 | 510 |
| SPUU | Direxion Daily S&P 500 Bull 2x Shares | 504 |
This ETF offers 3x daily long leverage to the S&P 500 Index, making it a powerful tool for investors with a bullish short-term outlook for large cap equities. Investors should note that UPRO's leverage resets on a daily basis, which results in compounding of returns when held for multiple periods.
| Period | SPXL Return | Category Return Low |
|---|---|---|
| 1 Yr | 68.1% | -56.1% |
| 3 Yr | 8.9%* | -63.1% |
| 5 Yr | 20.5%* | -48.6% |
| 10 Yr | 23.9%* | -45.6% |
Does SPXL pay dividends?
SPXL Dividend Information
SPXL has a dividend yield of 0.93% and paid $1.15 per share in the past year. The dividend is paid every three months and the last ex-dividend date was Mar 19, 2024.
For any holding period other than a day, your return may be higher or lower than the Daily Target. These differences may be significant. Smaller index gains/losses and higher index volatility contribute to returns worse than the Daily Target.
Experts agree that for most personal investors, a portfolio comprising 5 to 10 ETFs is perfect in terms of diversification. But the number of ETFs is not what you should be looking at.
Generally speaking, fewer than 10 ETFs are likely enough to diversify your portfolio, but this will vary depending on your financial goals, ranging from retirement savings to income generation.
Record Liquidity
SPY is the world's most traded ETF — trading $38.3 billion a day, on average — giving investors the ability to tap unmatched liquidity.
