A 3x leveraged ETF such as TQQQ promises three times the daily return of its index, here the Nasdaq-100, which QQQ tracks. Day by day, it delivers: on a typical day in our data, TQQQ’s move was within 0.07 percentage points of three times QQQ’s.
Over longer periods, though, the results can drift a long way from “three times”, sometimes far better, often far worse. This guide shows why, with the funds’ actual history, and why the drift matters most to anyone drawing an income from their investments.
The math of a daily reset
A leveraged fund resets its exposure every day. That makes each day’s result exact, but it means gains and losses compound on a changing base. Take an index that rises 10% one day and falls back to where it started the next:
| Day 1 | Day 2 | After two days | |
|---|---|---|---|
| Index | +10.0% | -9.09% | 0.0% |
| 3x fund | +30.0% | -27.27% | -5.45% |
The index is back where it began; the 3x fund is down 5.45%. Repeat that over a choppy year and the losses pile up even if the index goes nowhere. The bigger the daily swings and the higher the leverage, the bigger this “volatility drag”. In a steady trend the same compounding works in the fund’s favor, which is why leveraged funds can also beat their multiple.
When leverage helps, and when it hurts
Each year below compares TQQQ with three times QQQ’s return for the same year. TQQQ fell short in 9 of 15 full years and beat the multiple in 6.
| Year | QQQ | 3 × QQQ | TQQQ | Difference | QQQ swings |
|---|---|---|---|---|---|
| 2011 | +3.4% | +10.1% | -8.0% | -18.2 pts | 23.7% |
| 2012 | +18.1% | +54.3% | +52.3% | -2.0 pts | 15.3% |
| 2013 | +36.6% | +109.9% | +139.7% | +29.8 pts | 12.2% |
| 2014 | +19.2% | +57.6% | +57.1% | -0.5 pts | 13.8% |
| 2015 | +9.4% | +28.3% | +17.2% | -11.1 pts | 17.9% |
| 2016 | +7.1% | +21.3% | +11.4% | -9.9 pts | 16.2% |
| 2017 | +32.7% | +98.0% | +118.1% | +20.1 pts | 10.3% |
| 2018 | -0.1% | -0.3% | -19.8% | -19.5 pts | 22.9% |
| 2019 | +39.0% | +116.9% | +133.8% | +17.0 pts | 16.2% |
| 2020 | +48.6% | +145.8% | +110.1% | -35.8 pts | 35.6% |
| 2021 | +27.4% | +82.3% | +83.0% | +0.7 pts | 18.2% |
| 2022 | -32.6% | -97.7% | -79.1% | +18.7 pts | 32.1% |
| 2023 | +54.9% | +164.6% | +198.3% | +33.7 pts | 17.9% |
| 2024 | +25.6% | +76.7% | +58.2% | -18.5 pts | 18% |
| 2025 | +20.8% | +62.3% | -32.5% | -94.8 pts | 23.6% |
“QQQ swings” is the annualized volatility of QQQ’s daily returns that year. Total returns, distributions reinvested.
- Wild years hurt most. 2020 had the biggest swings in the table (35.6%): QQQ gained 48.6%, three times that would be 145.8%, but TQQQ made 110.1%, 35.8 points short.
- Steady climbs help. In 2023 QQQ rose 54.9% with modest swings, and TQQQ’s 198.3% beat three times the index by 33.7 points.
- A steady fall helps too, but only in relative terms. In 2022 three times QQQ’s loss would have been -97.7%; TQQQ lost 79.1%. That still takes a 378% gain to recover.
- The 3x S&P 500 fund UPRO shows the same pattern: it fell short of three times SPY’s return in 4 of 5 full years.
Leverage and withdrawals don’t mix
For someone spending from their portfolio, a deep loss early on is the worst thing that can happen: withdrawals keep coming out of a shrinking pile, and that money is not there for the recovery. Leverage multiplies exactly that risk. Here is $1 million started at the November 2021 peak, with 4% withdrawals raised each year with inflation:
| Fund | Peak to low | Back to its old high | Lowest balance | Balance, Oct 2026 |
|---|---|---|---|---|
| QQQ | -35.1% | Dec 13, 2023 | $644K Dec 2022 | $1.51M |
| QLD | -63.7% | May 28, 2024 | $371K Dec 2022 | $745K |
| TQQQ | -81.7% | Dec 4, 2024 | $189K Dec 2022 | $555K |
TQQQ’s price did climb back to its old high (in Dec 2024), but the withdrawal portfolio couldn’t follow: the money taken out near the bottom had to come from sales at deeply depressed prices. That is sequence-of-returns risk, multiplied by three.
Inverse funds: losing slowly
Inverse funds aim for the opposite of the index’s daily move, and they suffer the same compounding, on top of betting against a market that has mostly gone up. Since SH launched in Jun 2006, it has lost 91.1% while the S&P 500 (SPY) returned +791.8%. A 4% withdrawal test started at its launch ran out of money in May 2018. Inverse funds can work as a short-term hedge; held for years, they have been a reliable way to lose money.
If you hold one anyway
- Keep it small and short-term. These funds’ stated goal covers a single day, not any longer period. The longer you hold, the more the result depends on the path the market takes.
- Know the cost. TQQQ charges 0.78% a year and SH 0.88%, many times what a plain index fund costs.
- Never fund spending from it. A retirement income plan needs assets that won’t lose four-fifths of their value in a year.
Looking for more growth from your plan?
Before reaching for leverage, see what your own plan actually needs. ReadyAimRetire shows how your spending, Social Security and investments hold up, year by year, through good and bad markets.
Questions investors ask
Is TQQQ a good long-term investment?
It has had spectacular stretches, but its results depend on the path the market takes, not just where it ends up. It fell 81.7% from its 2021 peak and lost 19.8% in 2018, a year QQQ ended flat. Its prospectus states its goal as three times the index’s return for a single day, not for any longer period.
Why do leveraged ETFs lose value over time?
Because they reset every day. After a loss, the fund has less money to apply leverage to, so it needs a bigger gain to get back. In choppy markets this “volatility drag” adds up, even when the index finishes flat.
Can a leveraged ETF go to zero?
In principle, a one-day drop of a third in the index would wipe out a 3x fund. US market-wide trading halts make a single-day fall that large unlikely, but losses of four-fifths have happened over about a year: TQQQ fell 81.7% from November 2021 to December 2022.
Should leveraged ETFs be in a retirement account?
Most retirement plans are built to fund spending over decades, which is exactly the use these funds are not designed for. If you trade them at all, a small amount in a separate account keeps the risk away from the money you need to live on.
How we measured
Daily total-return prices (distributions reinvested) through Oct 27, 2026. Calendar years use December 31 to December 31; volatility is the annualized standard deviation of daily returns. The choppy-year search checked every 252-trading-day window since TQQQ’s launch in which QQQ ended within 3% of where it started. Withdrawal tests take 4% of the starting balance a year in monthly amounts that rise with US inflation (CPI-U), before taxes. For education only, not a recommendation to buy or sell any fund.