Leveraged ETF Calculator

The replay uses real (partly synthetic-backfilled) monthly adjusted prices — dividends and splits included; trading costs, taxes and spreads are not. Prices come from Yahoo Finance via automated processing and may contain errors or gaps; synthetic-backfill segments are estimates that can deviate from actual performance, so treat the results as indicative only. Past performance does not predict future returns.

Leveraged ETFs & rebalancing — FAQ

Does a 3× ETF really return 3× the index?

Only for a single day. A 3× ETF targets 3× the index's DAILY move, then resets. Over weeks and years those daily resets compound differently from the index, so the multi-year return is almost never 3× — it can be far more in a smooth bull run, or far less (even a loss) in a choppy or falling market.

What is volatility decay?

When a leveraged fund resets daily, an up day followed by a down day doesn't get you back to where you started — the bigger swings lose more than they recover. The rougher the ride, the more this 'decay' (or volatility tax) eats. It's why a 2×/3× fund can bleed even when the underlying index ends flat.

What does blending a leveraged ETF with its plain index (and rebalancing) do?

Holding, say, 50% of a 3× fund plus 50% of the plain 1× index gives you 2× effective exposure. Left alone, a rally lets the 3× sleeve grow until your real exposure creeps higher — right before a pullback hurts most. Rebalancing yearly trims the leveraged sleeve back to target and tops it up after a fall: it pins effective exposure between 1× and 3×, forces buy-low / sell-high, and softens the drawdown versus going all-in on the 3× fund.

How much of a leveraged ETF should I hold — which split is best?

There's no universal answer; it depends on the return, volatility and financing you assume. A higher leveraged share lifts the median return only when the net premium (expected return minus financing cost) is positive and volatility is moderate — and it always deepens the drawdown. Compare the max-drawdown and Sharpe rows across the splits: the right one is the highest leverage whose drawdown you could actually sit through without selling. Often that's far less leverage than it first seems, and sometimes 0/100 (no leverage) wins outright.

Should I hold a leveraged ETF all-in for the long term?

Issuers and regulators explicitly say these are designed for a single day, not buy-and-hold. In a long, low-volatility uptrend all-in leverage can dramatically outperform; in a sideways or bear market it decays and can take years to recover from a deep drawdown. A rebalanced blend with cash is the more defensible way to keep leverage long term — study the max-drawdown row before deciding.

Why is the Sharpe ratio barely better (or worse) with leverage?

Leverage scales return and volatility together, so in a frictionless world the Sharpe ratio would be unchanged. In reality, financing costs, fees, and volatility decay only subtract — so all-in leverage usually leaves Sharpe flat or lower. A rebalanced blend often edges it back up, because it sheds risk faster than it sheds return.

How accurate is this simulation?

It captures the core mechanics — daily reset, volatility decay, rebalancing, financing and expense costs — using a lognormal model of the index. The defaults (≈0.95% expense, ≈5% financing) are reasonable; adjust them to a specific fund's prospectus. It does NOT capture fat tails, sudden crashes, volatility clustering, or tracking error, all of which tend to hurt leverage more than this model shows. Treat the numbers as illustrative, not a backtest of any specific fund.

Which 2× and 3× ETFs do these map to?

Pick the 1× index and the tool leverages it for you. Real-world examples: S&P 500 → SSO (2×), UPRO/SPXL (3×); Nasdaq 100 → QLD (2×), TQQQ (3×); semiconductors → SOXL (3×); Taiwan 0050 → 00631L (2×); Nikkei 225 → 1570 (2×). The cash sleeve is any money-market fund, T-bills, or short-term bonds. Availability and exact leverage vary by market.

• 00631L Taiwan 50 2×

  Load 00631L's 2× leverage and ~1% fund costs into a Monte Carlo simulation: 100% leveraged vs 50/50 vs the plain 1× index, with terminal values and max drawdowns.

• 00675L TAIEX 2×

  Load 00675L's daily 2× leverage and ~0.75% fund costs into a Monte Carlo simulation: 100% leveraged vs 50/50 vs the plain 1× index, with terminal values and max drawdowns.

• 00670L Nasdaq-100 2×

  00670L gives you 2× daily Nasdaq-100 exposure in TWD on the Taiwan exchange. Simulate long-term holding with its real leverage and costs: all-in vs 50/50 vs plain 1×.

• TQQQ 3× Nasdaq-100

  TQQQ is 3× daily Nasdaq-100. Load its 0.84% expense ratio and QQQ's 10-year numbers, then simulate all-in vs 50/50 vs plain QQQ — terminal values and max drawdowns.

• QLD 2× Nasdaq-100

  QLD is 2× daily Nasdaq-100, often argued to be the holdable alternative to TQQQ. Load its real expense ratio, simulate terminal values and drawdowns, and size your allocation.

• SSO 2× S&P 500

  SSO runs 2× daily leverage on the S&P 500 — a low-volatility index on moderate leverage, the textbook case for leveraged long-term holding. Simulate it with real costs.

• SPXL 3× S&P 500

  SPXL runs 3× daily leverage on the S&P 500. Load its 0.91% expense ratio and 10-year data, and simulate how far all-in, 50/50 and plain 1× diverge in value and drawdown.

• SOXL 3× Semiconductors

  SOXL is 3× the daily semiconductor index — the harshest decay profile among mainstream leveraged ETFs. Load its real parameters and see how brutal the gaps get.

• USD 2× Semiconductors

  ProShares USD runs 2× daily leverage on US semiconductors — half SOXL's dose. Load its 0.95% expense ratio and simulate values and drawdowns: all-in vs 50/50 vs plain 1×.