What is a leveraged ETF?

A leveraged ETF is an exchange-traded fund that uses debt or financial derivatives as leverage to amplify the returns of a benchmark index, such as the S&P 500. Leveraged ETFs can produce significant short-term gains, such as 2x or 3x the performance of their benchmark, but investors should note that short-term losses can also be amplified.

What is a 3x leveraged ETF?

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%. It would also lose 3% if the S&P dropped by 1%. What Research Is Needed to Trade in Triple Leveraged ETF?

What is daily resetting of leveraged ETFs?

Also note that the daily resetting of leveraged ETFs means the fund only provides the stated percentage return relative to the underlying index on a daily basis, not necessarily over the long term. Because of this, volatility of the index can eat away at gains; this is known as volatility decay or beta slippage.

Which 3x leveraged S&P 500 ETF has the lowest fees?

The 3X leveraged S&P 500 ETF with the lowest fees is UPRO and the 3X leveraged S&P 500 ETF with the highest liquidity is SPXL. The one-year total return of the S&P 500 Index is 42.4%, as of May 20, 2021. But investors should remember that these ETFs are not designed to mimic long-term returns.