Most Traded Leveraged ETFs for Q2 2022

Triston Martin

Feb 01, 2024

The leveraged ETFs are more complicated than conventional ETFs. They tend to place their portfolios on financial derivatives and debt-like swaps to boost the return of the index they track. A lot of these ETFs have received the attention of investors in the last two years to take advantage of the market volatility because of the COVID-19 epidemic and its associated disruptions to worldwide and U.S. economies.

Leveraged ETFs usually allow investors to get more than three times the index's performance they are holding. Some offer 0.5 and 1.5 times, or inverted leverage, for example, 2x or -3x the performance. Therefore leveraged ETFs are only suitable for experienced investors with a high degree of risk tolerance. They are typically utilized as short-term trading instruments, and most investors can exit their positions within days or days.

57 different leveraged ETFs trade within the United States, excluding funds that have under $50 million in the assets they manage. The volume of trading is the most important metric investors consider when deciding which leveraged ETFs produce the highest interest. The ETFs with the highest trading volumes tend to have the highest liquidity and could be more convenient to trade into or out of.

There is no standard for these funds. Each fund strives to achieve its investment goal every day. The funds below are not ranked based on one-year returns. Instead, they are ranked based on trading volume, a gauge of liquidity. However, for comparison purposes, the S&P 500 had an annual return of 16.8 percent in the past year, as of February 10, 2022. The most popular ETF leverages based on three months of the average daily trading volume.

ProShares UltraPro QQQ (TQQQ)

TQQQ gives 3x daily exposure to the high-tech Nasdaq-100 Index, a major market index comprising the 100 biggest non-financial companies listed within the Nasdaq Stock Market based on market capitalization. The ETF allows bullish investors to earn significant gains when an upward movement in the index over a single day. If the Nasdaq-100 rises by one percent during one day, the fund will increase by 3percent. Because of the reset feature that occurs daily and holding the fund longer than a single day can result in increased returns and results which are likely to diverge from the expected return. The TQQQQ fund is intended that is designed for highly sophisticated investors. It is not suited for those hesitant about risk or as part of a buy-and-hold investment strategy. The fund comprises shares of the companies that make up the Nasdaq-100 and uses various index swaps to offer increased exposure to the index.

ProShares Ultra VIX Short-Term Futures (UVXY)

UVXY gives 1.5x daily exposure to the benchmark S&P 500 VIX short-term futures index, which is an index that measures how monthly Cboe futures contracts Volatility Index that have a weighted average of 1 month from the date of expiration. The VIX is often known as "the "fear gauge" or "fear index," and it reached a peak in 2020 before the onset of the pandemic and has remained at an elevated level for the last few years. The ETF offers investors an opportunity to benefit from anticipated increases in volatility. It offers 1.5x the performance per day for its index. If the fund index rises 1percent in one day, it is predicted to increase by 1.5 percent. UVXY makes use of swaps and futures to reach its goal return. It is designed for strategies for short-term use by sophisticated investors. It is not suitable for use in conjunction with a buy-and-hold portfolio.

Direxion Daily Semiconductor Bull 3X Shares ETF (SOXL)

SOXL is seeking to produce daily outcomes in investing that are equivalent to 300 percent of the results from the ICE Semiconductor Index. The index is a customized float-adjusted market capitalization-weighted index tracking the performance of the 30 top U.S. listed semiconductor businesses. These include companies that manufacture semiconductors or offer services or equipment. The industry of semiconductors and the worldwide shortage of chips has been the main concern for investors during the COVID-19 epidemic. SOXL does not intend to offer the highest returns for leveraged investments over a period that is longer than one day. SOXL employs a variety of vehicles to accomplish its objectives, including the use of derivatives and directly acquiring semiconductor stocks to accomplish its goal.

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