Most Traded Leveraged ETFs for Q2 2022

TQQQ, UVXY, and SOXL are the most traded leveraged ETFs for Q2 2022

Exchange-traded funds (ETFs) offer investors a straightforward way to own a single security whose performance is based on a much larger basket of securities. Typically, the basket is constructed to track the performance of an underlying index, such as the S&P 500. Likewise, leveraged ETFs provide investors with a single investment vehicle representing a broad basket of securities.

However, these leveraged ETFs are much more complex instruments than traditional ETFs and tend to focus their holdings heavily on debt and financial derivatives, such as swaps, to amplify the returns on the index being tracked. Many of these ETFs have been favored by investors over the past two years to exploit the volatility in the markets due to the COVID-19 pandemic and related disruptions in the global and U.S. economies.

Key Takeaways

  • The leveraged exchange-traded funds (ETFs) with the highest three-month average daily volume are TQQQ, UVXY, and SOXL.
  • These ETFs provide leveraged long exposure to the Nasdaq-100, leveraged long exposure to the S&P 500 VIX Short-Term Futures Index, and leveraged long exposure to the ICE Semiconductor Index, respectively. All three ETFs use derivatives, including swaps.
  • These funds reflect high investor interest in the tech-heavy index, volatility, and the semiconductor industry amid the global chip shortage. 

Leveraged ETFs often provide investors with the ability to achieve two or three times the daily performance of their index. But some offer 0.5 or 1.5 times, or even inverse leverage, such as -2× and -3× the performance. Thus, leveraged ETFs are suitable only for experienced investors with a high level of risk tolerance. They are most often used as short-term trading vehicles, with most investors exiting their positions in just a day or a few days.

Leveraged ETFs can be riskier investments than non-leveraged ETFs given that they respond to daily movements in the underlying securities that they represent, and losses can be amplified during adverse price moves. Furthermore, leveraged ETFs are designed to achieve their multiplier on one-day returns, but you should not expect that they will do so on longer-term returns. For example, a 2× ETF may return 2% on a day when its benchmark rises 1%, but you shouldn’t expect it to return 20% in a year when its benchmark rises 10%. For more details, see this U.S. Securities and Exchange Commission (SEC) alert.

There are 57 distinct leveraged ETFs that trade in the United States, excluding funds with less than $50 million in assets under management (AUM). High trading volumes are the key metric that many investors look at to decide which leveraged ETFs have been generating the most interest. These highly traded ETFs are likely to provide the most liquidity and thus may be easier to trade in and out of.

Inverse ETFs can be riskier investments than non-inverse ETFs, because they are only designed to achieve the inverse of their benchmark’s one-day returns. You should not expect that they will do so on longer-term returns. For example, an inverse ETF may return 1% on a day when its benchmark falls -1%, but you shouldn’t expect it to return 10% in a year when its benchmark falls -10%. For more details, see this SEC alert.

There is no benchmark for these funds, and each fund aims at achieving its investment objective on a daily basis. The three funds below are thus not ranked by one-year total return. Instead, they are ranked by trading volume, a measure of liquidity. But for reference, the S&P 500 provided a total return of 16.8% over the past year, as of Feb. 10, 2022. The most traded leveraged ETF, based on three-month average daily trading volume, is the ProShares UltraPro QQQ (TQQQ).

We examine the three most traded leveraged ETFs below. All numbers below are as of Feb. 10, 2022.

ProShares UltraPro QQQ (TQQQ)

  • Three-Month Average Daily Volume: 112,872,544
  • Performance Over One-Year: 10.4%
  • Expense Ratio: 0.95%
  • Annual Dividend Yield: N/A
  • Assets Under Management: $19.0 billion
  • Inception Date: Feb. 9, 2010
  • Issuer: ProShares

TQQQ provides 3× daily long exposure to the tech-heavy Nasdaq-100 Index, a major market index composed of 100 of the largest nonfinancial companies listed on the Nasdaq Stock Market based on market capitalization. The ETF provides bullish investors with a way to make significant gains on upward movements in the index over a given day. If the Nasdaq-100 increases 1% over the course of a single day, then the fund is expected to rise 3%. Due to the daily reset feature, holding the fund for longer than a single day will result in compounding of returns and results that are likely to significantly differ from the target return. TQQQ is a tool for sophisticated investors and is not meant for those with a low risk tolerance or as part of a buy-and-hold investment strategy. The fund holds shares of companies that comprise the Nasdaq-100 and utilizes various index swaps to provide leveraged exposure to the index.

ProShares Ultra VIX Short-Term Futures (UVXY)

  • Three-Month Average Daily Volume: 68,000,592
  • Performance Over One-Year: -86.3%
  • Expense Ratio: 0.95%
  • Annual Dividend Yield: N/A
  • Assets Under Management: $742.6 million
  • Inception Date: Oct. 3, 2011
  • Issuer: ProShares

UVXY offers 1.5× daily long exposure to the S&P 500 VIX Short-Term Futures Index, an index designed to measure the performance of monthly Cboe Volatility Index (VIX) futures contracts with a weighted average of one month to expiration. The VIX is commonly referred to as the “fear gauge” or “fear index,” and it spiked early in 2020 at the beginning of the pandemic and has remained at elevated levels ever since. The ETF provides investors with a way to profit from expected increases in volatility, offering 1.5× the daily performance of its index. When the fund’s index rises 1% on a single day, the fund is expected to rise 1.5%. UVXY uses futures and swaps to achieve its intended target return. It is intended for short-term strategies by sophisticated investors and should not be used as part of a buy-and-hold portfolio.

Direxion Daily Semiconductor Bull 3X Shares ETF (SOXL)

  • Three-Month Average Daily Volume: 23,262,940
  • Performance Over One-Year: 16.1%
  • Expense Ratio: 0.96%
  • Annual Dividend Yield: 0.03%
  • Assets Under Management: $6.2 billion
  • Inception Date: March 11, 2010
  • Issuer: Rafferty Asset Management

SOXL seeks to achieve daily investment results that are 300% of the performance of the ICE Semiconductor Index. The index is a modified float-adjusted market capitalization-weighted index tracking the performance of the 30 largest U.S.-listed semiconductor companies. This includes companies that either make semiconductors or companies that provide services or equipment. The semiconductor industry and the global chip shortage have been a major focus of investors during the COVID-19 pandemic. SOXL is not intended to provide leveraged returns over a period greater than one day. SOXL uses several vehicles to achieve its goals, including the use of derivatives as well as direct ownership of semiconductor stocks in order to achieve its aim.

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  2. ETF Database. “ETF Screener.” Accessed Feb. 12, 2022.

  3. ETF Database. “TQQQ: ProShares UltraPro QQQ.” Accessed Feb. 12, 2022.

  4. ProShares. “TQQQ: UltraPro QQQ.” Accessed Feb. 12, 2022.

  5. ProShares. “UVXY: Ultra VIX Short-Term Futures ETF.” Accessed Feb. 12, 2022.

  6. ETF Database. “UVXY: ProShares Ultra VIX Short-Term Futures ETF.” Accessed Feb. 12, 2022.

  7. ICE. "ICE DATA INDICES RULES AND METHODOLOGY," Page 1. Accessed Feb. 12, 2022.

  8. Direxion. "SOXL SOXS." Accessed Feb. 12, 2022.

  9. CNET. "Why the heck is there still a chip shortage for cars?" Accessed Feb. 12, 2022.

  10. ETF Database. "Direxion Daily Semiconductor Bull 3X Shares ETF." Accessed Feb. 12, 2022.

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