QLD or TQQQ for the long run?

Most long-term-holding arguments end up at 2× or below. 3×'s decay and drawdown profile in choppy markets makes it more of a trading instrument; 2× retains a positive long-run expectation at historical volatility levels. The standing assumption, always, is that the index trends up over your horizon.

Why is 2× called "near-optimal" leverage?

Differentiate the geometric return against leverage and the peak lands near return ÷ volatility²; with long-run US large-cap numbers that's roughly 1.5–2.5×. It's input-sensitive — cut expected return by two or three points and the optimum slides toward 1×. The calculator above lets you run exactly that experiment.

What would 2008 do to QLD?

No need to speculate — it happened: about −81% peak to trough, then years to a new high. The 10th-percentile column in the simulation is there to remind you of that script. Size the position off that column, not the median.

What does ten years of DCA into QLD look like?

It depends on the path: spectacular in a one-way bull, worse than simply DCA-ing QQQ through a long chop. Use the simulator above to vary horizon and return and look at the whole distribution — judge it by whether you can live with the 10th percentile, not by how pretty the median is.

Is 50% QLD + 50% QQQ the same as buying TQQQ?

Not remotely. Half QLD, half QQQ is ~1.5× effective exposure with far less decay than TQQQ's 3×. That 'use a 2× fund to dial in 1.x× exposure' construction is exactly what the middle columns of the simulation compare.

← Back to the full Leveraged ETF Calculator

QLD: Is 2× QQQ the Rational Long-Term Leverage?

Same index as TQQQ, half the leverage. QLD lacks the fireworks, but its daily-reset decay is less than half of 3×'s, and deep drawdowns are far more recoverable — which is why "holding QLD long term" holds up much better mathematically. This page runs its actual parameters.

Leveraged ETF Calculator

Compare how much of a leveraged ETF to hold versus its plain 1× index — five splits from all-leverage to all-index, rebalanced monthly, quarterly or yearly. See CAGR, drawdown and risk-adjusted return, volatility decay included.

Underlying index

Index

Expected return (CAGR)The 1× index's compound annual growth rate. The leveraged fund is built from this — you don't enter it directly.

VolatilityHow wildly the index's returns swing year to year. This is the engine of volatility decay: the higher it is, the more a 2×/3× fund bleeds in choppy markets.

Leverage & rebalancing

Leverage factorThe leverage of the risky fund, used in both the all-in hold and the blend. Real products offer 2× or 3×.

Rebalancing frequencyHow often each split is traded back to its target weights. Higher frequency tracks the target exposure more tightly and “buys low, sells high” more often, but in practice also means more trading costs and taxes (not modelled here).

The tool compares five fixed splits — 100/0, 75/25, 50/50, 25/75, 0/100 — of this leveraged fund and its plain 1× index, all rebalanced yearly.

Capital & horizon

Starting capital

Holding period

yrs

Fund costs

Expense ratioThe fund's annual fee, charged on the whole position. Leveraged ETFs typically run 0.9–1.0%, far above a plain index fund's ~0.05%.

Financing rateThe annual interest a leveraged fund pays to borrow its extra exposure. Charged on the borrowed (L−1)× portion, so it hits 3× harder than 2× and never touches 1×. Tracks short-term rates.

Strategy comparison

fund / 1×

100/0

2.0×

75/25

1.8×

50/50

1.5×

25/75

1.3×

0/100

1.0×

Median ending value

1.6M

1.4M

1.1M

856K

655K

CAGR

32.3%

29.8%

27.0%

24.0%

20.7%

Volatility

38.1%

33.5%

28.8%

24.0%

19.0%

Max drawdownMedian worst peak-to-trough fall along the simulated paths, at daily resolution. This is the loss you'd have to sit through — leverage multiplies it, rebalancing into cash trims it.

−52.7%

−47.1%

−40.9%

−34.7%

−27.8%

SharpeReturn per unit of volatility (CAGR ÷ volatility, risk-free rate 0). A rebalanced blend often scores higher than all-in leverage, because it sheds risk faster than return.

0.85

0.89

0.94

1.00

1.09

CalmarReturn per unit of max drawdown (CAGR ÷ max drawdown). A drawdown-based cousin of Sharpe — how much growth you earn for the worst fall you endure.

0.61

0.63

0.66

0.69

0.74

Unlucky (P10)

346K

341K

330K

316K

300K

Lucky (P90)

8.3M

5.7M

3.8M

2.4M

1.5M

Each column is a split between the 2× fund and its plain 1× index (leveraged % / index %), rebalanced yearly. Effective exposure = leveraged share × 2 + index share × 1 (shown under each split); 0/100 is the plain 1× index.

Median growth by strategy

Over 10 years, going 100% into the 2× QQQ — Nasdaq 100 fund reaches a median 1.6M; a 50/50 split with the 1× index reaches 1.1M, and the plain 1× index 655K — every column rebalanced yearly.

The cost of leverage is drawdown: 100/0 typically falls 52.7% peak-to-trough, versus 40.9% for the 50/50 split.

Based on 500 simulated paths with daily-reset leverage. A simplified lognormal model, not a forecast: real markets have fatter tails, jumps, and shifting volatility, all of which hit leverage harder. Treat as rough odds, not promises.

What this ticker works out to

Under the prefilled assumptions, going 100% QLD for 10 years lands at a median value of about 1.6M (≈32.3% annualised) — with a median max drawdown of −52.7% along the way. A 50/50 blend with the plain 1× index comes to about 1.1M with the drawdown cut to −40.9%; skipping leverage entirely (pure 1× index) gives about 655K at −27.8%.

Monte Carlo simulation seeded with the underlying index's 10-year CAGR and estimated volatility. That decade was a strong bull run — shave a few points off the return and look again.

How to read this result

Leverage scales return linearly but decay quadratically — which is why an *optimal* leverage exists at all. Geometric return ≈ leverage × return − leverage² × volatility² ⁄ 2 − costs; for assets with a US-index-like return/volatility ratio, the peak of that curve has historically sat near 2×. Beyond it, extra decay and deeper drawdowns start eating the excess return. QLD sits right at that spot. It has traded since 2006 and lived through 2008 in full: peak-to-trough was over 80%. So "2× is safer" is relative to 3× — in absolute terms this still halves and halves again, and sizing remains everything.

Good fit: 10+ year horizons targeting ~1.3–1.6× effective exposure — say 30–50% QLD next to the 1× index or cash, rebalanced on schedule.

Watch out: QLD went through a −80%-class drawdown in 2008; more forgiving than 3× doesn't mean eyes-closed all-in. Its 0.95% expense ratio is also several times the plain QQQ's — a real long-term drag.

Common questions

QLD or TQQQ for the long run?: Most long-term-holding arguments end up at 2× or below. 3×'s decay and drawdown profile in choppy markets makes it more of a trading instrument; 2× retains a positive long-run expectation at historical volatility levels. The standing assumption, always, is that the index trends up over your horizon.
Why is 2× called "near-optimal" leverage?: Differentiate the geometric return against leverage and the peak lands near return ÷ volatility²; with long-run US large-cap numbers that's roughly 1.5–2.5×. It's input-sensitive — cut expected return by two or three points and the optimum slides toward 1×. The calculator above lets you run exactly that experiment.
What would 2008 do to QLD?: No need to speculate — it happened: about −81% peak to trough, then years to a new high. The 10th-percentile column in the simulation is there to remind you of that script. Size the position off that column, not the median.
What does ten years of DCA into QLD look like?: It depends on the path: spectacular in a one-way bull, worse than simply DCA-ing QQQ through a long chop. Use the simulator above to vary horizon and return and look at the whole distribution — judge it by whether you can live with the 10th percentile, not by how pretty the median is.
Is 50% QLD + 50% QQQ the same as buying TQQQ?: Not remotely. Half QLD, half QQQ is ~1.5× effective exposure with far less decay than TQQQ's 3×. That 'use a 2× fund to dial in 1.x× exposure' construction is exactly what the middle columns of the simulation compare.

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How much of a leveraged ETF should you hold versus the plain index? Compare 100/0, 75/25, 50/50, 25/75 and 0/100 splits of a 2×/3× fund and its 1× index — all rebalanced yearly — on CAGR, max drawdown, Sharpe and Calmar.

Built by indigo.la.ringo · AppicLab · Last updated: June 28, 2026