There are many types of ETFs out there. They range from financial ETFs to high yield ETFs, and then there are 3X ETFs. 3X ETFs are the triple leveraged ETFs. These ETFs are designed to amplify the returns of the benchmark indices by three times by using financial derivatives and debt. Thus, compared to traditional ETFs that track the underlying index on a 1:1 basis, tripe leveraged ETFs aim to follow the benchmark index on a 3:1 basis.
3X ETFs are, therefore, more suitable for short-term trading purposes rather than long-term investment opportunities. They are more expensive than traditional ETFs due to the use of leverage and the need for constant trading to maintain their positions.
|GUSH||Direxion Daily S&P Oil & Gas Exploration & Production Bull 3x Shares||$132.32||99.49%|
|JDST||Direxion Daily Junior Gold Miners Index Bear 3X Shares||$11.80||6.59%|
|SOXS||Direxion Daily Semiconductor Bear 3x Shares||$34.78||-45.49%|
|ERX||Direxion Daily Energy Bull 3X Shares||$46.27||99.61%|
|BRZU||Direxion Daily Brazil Bull 3X Shares||$73.00||-34.97%|
|LABD||Direxion Daily S&P Biotech Bear 3x Shares||$20.12||-4.69%|
|TECS||Direxion Daily Technology Bear 3X Shares||$30.96||-29.32%|
|SQQQ||ProShares UltraPro Short QQQ||$36.50||-8.75%|
|DUST||Direxion Daily Gold Miners Bear 3X Shares||$21.95||18.33%|
|JNUG||Direxion Daily Junior Gold Miners Index Bull 3x Shares||$36.93||-50.27%|
|SRTY||ProShares UltraPro Short Russell2000||$50.52||5.03%|
|TZA||Direxion Daily Small Cap Bear 3X Shares||$32.62||6.15%|
|FAZ||Direxion Daily Financial Bear 3X Shares||$23.53||-6.55%|
|DFEN||Direxion Daily Aerospace & Defense Bull 3X Shares||$17.65||-22.55%|
|SPXU||ProShares UltraPro Short S&P 500||$15.07||-8.44%|
|SPXS||Direxion Daily S&P 500 Bear 3X Shares||$19.84||-8.70%|
|RUSL||Direxion Daily Russia Bull 3x Shares||$336.75||-99.84%|
|EDZ||Direxion Daily Emerging Markets Bear 3X Shares||$13.66||58.65%|
|SDOW||ProShares UltraPro Short Dow30||$30.50||-1.55%|
|NUGT||Direxion Daily Gold Miners Bull 3X Shares||$31.49||-46.25%|
|DRN||Direxion Daily Real Estate Bull 3x Shares||$17.30||-30.24%|
|YANG||Direxion Daily China 3x Bear Shares||$14.65||-17.74%|
|TMV||Direxion Daily 20-Year Treasury Bear 3X||$88.32||56.37%|
|TTT||UltraPro Short 20+ Year Treasury||$50.03||57.48%|
|DRIP||Direxion Daily S&P Oil & Gas Exploration & Production Bear 3x Shares||$21.03||-97.78%|
|FAS||Direxion Daily Financial Bull 3X Shares||$74.53||-33.46%|
|INDL||Direxion Daily India Bull 3x Shares||$50.46||-8.83%|
|NAIL||Direxion Daily Homebuilders & Supplies Bull 3X Shares||$37.18||-56.79%|
|EURL||Direxion Daily FTSE Europe Bull 3x Shares||$18.72||-52.75%|
|UDOW||ProShares UltraPro Dow30||$58.13||-23.87%|
|MIDU||Direxion Daily Mid Cap Bull 3X Shares||$41.70||-32.34%|
|ERY||Direxion Daily Energy Bear 3X Shares||$50.36||-69.18%|
|YINN||Direxion Daily China 3x Bull Shares||$69.74||-71.67%|
|TNA||Direxion Daily Small Cap Bull 3X Shares||$44.92||-48.65%|
|URTY||ProShares UltraPro Russell2000||$53.48||-48.70%|
|USLV||VelocityShares 3x Long Silver ETN||$56.88||19.57%|
|CURE||Direxion Daily Healthcare Bull 3x Shares||$109.96||-10.31%|
|EDC||Direxion Daily Emerging Markets Bull 3X Shares||$36.56||-59.72%|
|SPXL||Direxion Daily S&P 500 Bull 3X Shares||$85.58||-26.44%|
|UPRO||ProShares UltraPro S&P 500||$45.44||-26.66%|
|TMF||Direxion Daily 20-Year Treasury Bull 3X||$13.94||-53.39%|
|TECL||Direxion Daily Technology Bull 3X Shares||$42.68||-33.21%|
|SOXL||Direxion Daily Semiconductor Bull 3x Shares||$22.07||-53.21%|
|LABU||Direxion Daily S&P Biotech Bull 3x Shares||$10.78||-82.80%|
|TQQQ||ProShares UltraPro QQQ||$36.15||-47.69%|
|FNGU||MicroSectors FANG+™ Index 3X Inverse Leveraged ETN||$11.19||-70.24%|
How Do 3X ETFs Work?
3X ETFs aim to 3X the returns of the asset that the ETF tracks. Returns are amplified 3X, whether negative or positive.
For example, a 3X gold ETF would have 3X the volatility of gold. For every 1% movement in gold, the ETF would move 3% (whether to the upside or downside).
Factors to Consider Before Investing in 3X ETFs
The most critical factor to consider before investing in 3X ETFs is that leverage is a double-edged sword. Triple leveraged ETFs do amplify returns, but at the same time, they increase the risks as well. They are highly volatile and may lead to the loss of the entire principal capital if not managed well.
Therefore, investors must be cautious while investing in 3X ETFs. The fundamentals of the funds must be analyzed, including the expense ratio, rate of return, and average yield over a long period of time. Additionally, investors must also cross-check if the rates of return being promised by the specific 3X ETFs are feasible and sustainable.
Before determining if a 3X ETF is right for you, make sure you are comfortable holding an ETF that is 3X as volatile as the asset it follows. While many investors get excited about 3X returns in bull markets, they may not be able to handle 3X downside during bear markets.
The volatility of 3X ETFs can be tamed by minimizing portfolio allocations, and this is actually a very practical application.
For example, the SPY ETF is an ETF that aims to track the movement of the S&P 500 index (without leverage). UPRO is an ETF that aims to track the movement of the S&P 500 with 3X leverage. Allocating 10% of your portfolio to UPRO would provide similar exposure to the S&P 500 as allocating 30% of your portfolio to SPY. This type of portfolio allocation can be beneficial for investors who want to diversify their portfolios past a few holdings.
Which 3X ETFs Should I Buy?
A wide variety of 3X ETFs trade on the US stock exchanges. We have aggregated a list of the top 3X ETFs, with at least $25 million in assets under management, for investors to make their selection from.
Investors can decide which 3X ETFs to buy based on the underlying index they track, leverage used, rates of return promised, and whether they will make money when the index rises or declines in value. Triple leveraged ETFs are excellent avenues of investment for magnifying the returns; however, they are highly volatile and risky.