With market volatility on the rise due to heightened tensions from the U.S. trade beef with China, Brexit negotiations, and generalized global uncertainty and political unrest, savvy investors are looking for ways to capitalize on the broadening market movement and hedge existing portfolios against potential market declines. Leveraged ETFs are one of the tools that serve investors with these goals quite well.

A leveraged exchange-traded fund is a type of marketable security that uses financial derivatives such as options contracts, futures, margin accounts, and debt to boost the returns of an underlying index. While a traditional ETF typically follows the securities in its underlying index on a one-to-one basis, a leveraged ETF may aim for a 2:1 or 3:1 ratio. These ETFs can be designed for both short and long trades, so investors can access the upside and downside of market activity.

Although there are a number of leveraged ETFs in a plethora of industries, including those aimed specifically at indices, those investors seeking tech stock participation might consider the Nasdaq as their vehicle of choice, particularly, the Nasdaq 100. The Nasdaq-100 Index includes 100 of the largest domestic and international non-financial companies listed on The Nasdaq Stock Market based on market capitalization. The Index reflects companies across major industry groups including computer hardware and software, telecommunications, retail/wholesale trade and biotechnology. It does not contain securities of financial companies including investment companies. Here are the 5 biggest leveraged Nasdaq 100 ETFs, all of which have an expense ratio of 0.95%.

ProShares UltraPro QQQ (TQQQ)

  • AUM: $3.73 billion
  • Expense Ratio: 0.95%

This leveraged ProShares ETF seeks a return that is 3x the return of its underlying benchmark (target) for a single day, as measured from one NAV calculation to the next. Due to the compounding of daily returns, ProShares’ returns over periods other than one day will likely differ in amount and possibly direction from the target return for the same period. These effects may be more pronounced in funds with larger or inverse multiples and in funds with volatile benchmarks. Investors should monitor their holdings as frequently as daily.

ProShares Ultra QQQ (QLD)

  • AUM: $1.85 billion
  • Expense Ratio: 0.95%

This leveraged ProShares ETF seeks a return that is 2x the return of its underlying benchmark (target) for a single day, as measured from one NAV calculation to the next. Due to the compounding of daily returns, ProShares’ returns over periods other than one day will likely differ in amount and possibly direction from the target return for the same period. These effects may be more pronounced in funds with larger or inverse multiples and in funds with volatile benchmarks. Investors should monitor their holdings as frequently as daily

ProShares UltraPro Short QQQ (SQQQ)

  • AUM: $1.0 billion
  • Expense Ratio: 0.95%

This short ProShares ETF seeks a return that is -3x the return of its underlying benchmark (target) for a single day, as measured from one NAV calculation to the next. Due to the compounding of daily returns, ProShares’ returns over periods other than one day will likely differ in amount and possibly direction from the target return for the same period. These effects may be more pronounced in funds with larger or inverse multiples and in funds with volatile benchmarks. Investors should monitor their holdings as frequently as daily.

ProShares Short QQQ (PSQ)

  • AUM: $554 million
  • Expense Ratio: 0.95%

This short ProShares ETF seeks a return that is -1x the return of its underlying benchmark (target) for a single day, as measured from one NAV calculation to the next. Due to the compounding of daily returns, ProShares’ returns over periods other than one day will likely differ in amount and possibly direction from the target return for the same period. These effects may be more pronounced in funds with larger or inverse multiples and in funds with volatile benchmarks. Investors should monitor their holdings as frequently as daily.

ProShares UltraShort QQQ (QID)

  • AUM: $332 million
  • Expense Ratio: 0.95%

This short ProShares ETF seeks a return that is -2x the return of its underlying benchmark (target) for a single day, as measured from one NAV calculation to the next. Due to the compounding of daily returns, ProShares’ returns over periods other than one day will likely differ in amount and possibly direction from the target return for the same period. These effects may be more pronounced in funds with larger or inverse multiples and in funds with volatile benchmarks. Investors should monitor their holdings as frequently as daily.

For more leveraged ETF plays, visit our Leveraged & Inverse ETF Channel.

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