These 2 ETFs Have Been Red-Hot: Can it Continue?

Direxion Daily S&P 500 Bull 3X Shares (NYSEMKT:SPXL) and ProShares – Ultra QQQ (NYSEMKT:QLD) both offer leveraged exposure to major U.S. indexes, but QLD charges a marginally higher fee, tracks a tech-heavy portfolio, and manages nearly double the assets under management (AUM).

SPXL and QLD are both daily leveraged exchange-traded funds (ETFs) designed for aggressive traders seeking amplified returns from headline U.S. equity indexes. While SPXL targets three times (3x) the daily moves of the S&P 500, QLD seeks two times (2x) the daily performance of the Nasdaq-100, resulting in different sector exposures and risk profiles.

Beta measures price volatility relative to the S&P 500; beta is calculated from five-year weekly returns. The 1-yr return represents total return over the trailing 12 months.

QLD comes with a marginally higher expense ratio than SPXL, making SPXL slightly more affordable for cost-conscious traders. QLD also offers a lower dividend yield, so investors seeking income may find SPXL more appealing for its higher payout.

QLD seeks to deliver twice the daily performance of the Nasdaq-100 Index and has been operating for nearly 20 years. It holds 101 companies, with a pronounced tilt toward technology (53%) and communication services (17%), and its top three positions are Nvidia Corp (NASDAQ:NVDA), Apple Inc (NASDAQ:AAPL), and Microsoft Corp (NASDAQ:MSFT). The fund’s daily leverage reset means that returns can diverge from expectations over longer holding periods, especially in volatile markets.

SPXL, by contrast, offers leveraged exposure to the broader S&P 500, resulting in a more diversified sector mix: technology at 35%, financial services at 13%, and communication services at 11%. Its largest holdings are also Nvidia Corp (NASDAQ:NVDA), Apple Inc (NASDAQ:AAPL), and Microsoft Corp (NASDAQ:MSFT), but with much smaller weightings compared to QLD. Both funds include a daily leverage reset quirk, which is important for those considering holding periods longer than a single trading day.

For more guidance on ETF investing, check out the full guide at this link.

Leveraged ETFs are going to be more volatility than traditional ETFs, so investors should keep that in mind. As 2X and 3X leveraged ETFs, that means they are designed to move twice, or three times, what the indexes do on a daily basis. They are built for higher alpha, but because they are leveraged, they can also experience wild swings the other way if markets go south.

So, over the past three-plus years, during one of the best bull markets in recent history, these ETFs have been en fuego. The ProShares Ultra QQQ returned 30% in 2025 and has a five-year annualized return of 20% and a 10-year annualized return of 31%.

The Direxion Daily S&P 500 Bull 3X Shares ETF has a 1-year return of 27% and five- and 10-year annualized returns of 28% and 30%, respectively.

The ETFs have gotten off to a bit more sluggish start in 2026, with the ProShares ETF up 1.2% and the Direxion ETF up 4.7% year-to-date, as of Feb. 3. Most analysts and experts anticipate more muted returns for the indexes in 2026, and investors should be wary of the high valuations of many large-cap stocks. These ETFs certainly deserve a place in a portfolio, but it might be wise to keep allocations lower and tucked within a well-diversified portfolio, as the bulls won’t run forever and there could be volatility.

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Dave Kovaleski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.

These 2 ETFs Have Been Red-Hot: Can it Continue? was originally published by The Motley Fool