ProShares - UltraPro QQQ·Financial Services
ProShares UltraPro QQQ seeks daily investment results, before fees and expenses, that correspond to three times (3x) the daily performance of the Nasdaq-100 Index.
Financial Services
Asset Management
2010-02-11
3.75

With the markets moving higher again, leverage has become all the rage on Wall Street. But dig into the numbers and you might find it's not such a good idea.

ProShares Ultra QQQ provides 2x daily leverage while ProShares UltraPro QQQ offers 3x daily leverage on the same underlying tech-heavy index. ProShares UltraPro QQQ has experienced a significantly deeper maximum drawdown of 81.80% compared to the 63.80% seen by ProShares Ultra QQQ.

One fund boasts steadier returns and broader diversification, while the other delivers sharper gains - and steeper drawdowns - in recent years.

The ProShares UltraPro QQQ has delivered an average annual return of 39.3% over 16 years. During declines in the Nasdaq-100 index, this leveraged ETF gets hit three times as hard.

There's been a lot of upbeat change in the Nasdaq since the last time Kevin Davitt (@nasdaq) appeared on our network in March. He examines the index's outperformance over recent years and how it compares to historical trends.

Leveraged exchange-traded funds deliver a daily multiple of an underlying index's return, using swaps and futures to reset exposure every session.