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Best Leveraged S&P 500 ETFs: Background
Before analyzing each of your options, it’s important to understand the appropriate use case for these funds.
Each of these ETFs are designed to be traded for only a single day, whether you’re seeking long or short leverage. Leveraged S&P 500 ETFs are for day-trading.
Holding these funds for longer than a single day will result in vastly different returns than you might expect.
For example, if the S&P 500 appreciates 10% over the last year, a 3x daily leveraged S&P 500 ETF will not return 30%.
However, the FAAMG stocks now represent a significant portion of the S&P 500, so the daily performance of these ETFs increasingly relies on the likes of Apple, Microsoft, Amazon, Facebook, and Google.
Disclaimer complete. Here are the top five leveraged S&P 500 ETFs:
- ProShares Ultra S&P 500 (SSO)
- Direxion Daily S&P 500 Bull 2X Shares (SPUU)
- ProShares UltraPro S&P 500 (UPRO)
- Direxion Daily S&P 500 Bull 3X Shares (SPXL)
- ProShares UltraPro Short S&P 500 (SPXU)
Now let’s review each fund in more detail.
#1. ProShares Ultra S&P 500 (SSO)
The leveraged ProShares ETF seeks a return that is 2x the return of the performance of the S&P 500 for a single day.
- Expense Ratio: 0.91%
- 3-Month Average Daily Volume: 6,300,000
- AUM: $4.2 billion
SSO has the highest liquidity amongst the 2x longs, but at a cost. The expense ratio on this fund is 0.91% compared to 0.64% on its competitor SPUU.
Higher liquidity results in less slippage on trades, meaning that investors are more likely to execute trades at the price when they buy or sell.
Minimizing slippage is paramount when day-trading. Traders prioritizing a lower expense ratio over liquidity in a fast-moving environment might be missing the bigger picture.
#2. Direxion Daily S&P 500 Bull 2x Shares (SPUU)
Like SSO, the Direxion Daily S&P 500 Bull 2x Shares ETF seeks daily investment returns that double the S&P 500.
- Expense Ratio: 0.64%
- 3-Month Average Daily Volume: 30,000
- AUM: $61 million
Consider SPUU instead of SSO if you’re looking for 2x leverage and prefer low fees over liquidity.
Direxion offers a lower expense ratio than SPUU to attract traders to its fund. If it had the same 0.91% expense ratio with lower liquidity, what would make investors choose it over ProShares’s ETF?
There are tradeoffs in everything, especially leveraged ETFs.
#3. ProShares UltraPro S&P 500 (UPRO)
The ProShares UltraPro S&P 500 ETF offers 3x daily long leverage to the S&P 500 Index.
UPRO offers even more short-term leverage than its sibling fund SSO, which offers 2x.
- Expense Ratio: 0.93%
- 3-Month Average Daily Volume: 11,300,000
- AUM: $3.1 billion
UPRO is just like its little brother SSO, but with 3x leverage instead of 2x. More leverage results in steeper price movements on the upside and the downside.
For example, if the S&P 500 increases 2% in a single day, SSO will increase 4%, and UPRO will increase 6%.
The extra leverage comes with a slightly higher expense ratio, increasing from 0.91% to 0.93%.
#4. Direxion Daily S&P 500 Bull 3X Shares (SPXL)
Like UPRO, the Direxion S&P 500 Bull 3X Shares offers just that — three times the daily returns of the S&P 500 Index.
- Expense Ratio: 0.97%
- 3-Month Average Daily Volume: 9,800,000
- AUM: $3.4 billion
SPXL is the top competitor of the previously mentioned ProShares UltraPro S&P 500 (UPRO).
It trades a similar volume and has the same assets under managementas UPRO but collects a slightly higher expense ratio.
SPXL does 20% more volume than UPRO and has better liquidity, but investors will have to weigh that benefit against paying more in fees.
#5. ProShares UltraPro Short S&P 500 (SPXU)
The ProShares UltraPro Short S&P 500 ETF seeks to return -3x the daily investment returns of the index.
SPXU is used to short the S&P 500 for a single trading day.
- Expense Ratio: 0.93%
- 3-Month Average Daily Volume: 28,000,000
- AUM: $693 million
SPXU is used to short the S&P 500 for a single trading day. It’s worth making this abundantly clear: SPXU shorts the S&P 500.
One look at a chart of the S&P 500, and you’ll see the odds are stacked against you.
The S&P 500 goes up more than it doesn’t. But that’s not to say you can’t make money using SPXU in the short-term.
Best Leveraged S&P 500 ETF FAQs
Is there a leveraged S&P 500 ETF?
Yes, there are several leveraged S&P 500 ETFs that vary by the amount of leverage, liquidity, expense ratio, and directionally long or short. The most popular leveraged S&P 500 ETF is the ProShares Ultra S&P 500 ETF (SSO), which offers 2x daily long leverage.
What is the most leveraged ETF?
Three times (3X) is the most leverage you can use with a US-listed ETF. A 3X leveraged ETF offers 3X the daily returns of the index it tracks, whether it be the S&P 500 or the Nasdaq 100 Index. For example, TQQQ and SQQQ provide 3x leverage, long and short respectively, on the Nasdaq 100 Index.
Are there 5x leveraged ETFs?
There are no 5x leveraged ETFs in the US markets. The most leverage you can get in an ETF is three times.
What is the best ETF to track the S&P 500?
The best ETF to track the S&P 500 is either the Vanguard 500 Index Fund ETF or the SPDR S&P 500 ETF Trust (SPY). They each offer low fees and are tax-efficient investment vehicles.
Bottom Line: Best Leveraged S&P 500 ETFs
Leveraged S&P 500 ETFs are a great option for traders looking to capitalize on some short-term volatility.
This article is for informational purposes only. It is not intended to be investment advice. To learn more about how we evaluated the Best Leveraged S&P 500 ETFs, read our editorial guidelines and public equities research framework.