Why is SOXL's long-term return far below "3× SOXX"?

Daily reset + high volatility = a huge compounding gap (volatility decay). "3× each day" is true; "3× over years" is not — and the gap grows with the square of volatility, on the most volatile mainstream index there is.

Can SOXL recover from a 90% drawdown?

It needs +900%, with decay still working against it the whole way. The common pattern is the underlying making new highs while SOXL is still halfway up the mountain — that's the asymmetric damage deep drawdowns do to daily-reset leverage.

I'm long-term bullish on semiconductors — should I buy SOXL?

Usually the better trade is the plain 1× semiconductor ETF, or a small SOXL slice next to a large 1× position. The 50/50 and 25/75 columns above are typically that conclusion, in numbers.

Can I DCA into SOXL to average down?

With a product capable of −90% drawdowns, averaging down is often catching a falling knife: semiconductor down-cycles run one to two years, and you'd be contributing into continuous decay. The survivable version is a small fixed allocation with periodic rebalancing — not buying more the further it falls.

What happens when a leveraged ETF falls too far? Can it be delisted?

After deep declines issuers routinely reverse split to keep the share price tradable (several 3× products have), leaving value unchanged and share count smaller; small leveraged funds do occasionally get liquidated outright. For a holder, the real cost is the recovery math — −90% needs +900% — not the split or delisting itself.

← Back to the full Leveraged ETF Calculator

SOXL: 3× Semiconductors, the Volatility-Decay Showcase

The semiconductor index runs ~30% annual volatility on its own; at 3× the path volatility approaches triple digits. SOXL is the most extreme mainstream case of decay eating return: the underlying rose more than tenfold in a decade while long-term SOXL holders often captured nothing like 3× of it — and 2022 took it down ~90% from its peak. This page lets the numbers speak.

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

3.0×

75/25

2.5×

50/50

2.0×

25/75

1.5×

0/100

1.0×

Median ending value

15.2M

13.3M

8.5M

4.6M

1.9M

CAGR

65.3%

63.0%

55.9%

46.6%

34.1%

Volatility

90.3%

76.0%

62.0%

47.1%

30.1%

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.

−86.2%

−78.6%

−68.8%

−56.5%

−40.4%

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.

0.72

0.83

0.90

0.99

1.13

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.

0.76

0.80

0.81

0.82

0.84

Unlucky (P10)

346K

567K

659K

653K

546K

Lucky (P90)

653.6M

340.8M

136.0M

39.2M

6.7M

Each column is a split between the 3× fund and its plain 1× index (leveraged % / index %), rebalanced yearly. Effective exposure = leveraged share × 3 + 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 3× SOXX — Semiconductors fund reaches a median 15.2M; a 50/50 split with the 1× index reaches 8.5M, and the plain 1× index 1.9M — every column rebalanced yearly.

The cost of leverage is drawdown: 100/0 typically falls 86.2% peak-to-trough, versus 68.8% 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% SOXL for 10 years lands at a median value of about 15.2M (≈65.3% annualised) — with a median max drawdown of −86.2% along the way. A 50/50 blend with the plain 1× index comes to about 8.5M with the drawdown cut to −68.8%; skipping leverage entirely (pure 1× index) gives about 1.9M at −40.4%.

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

Decay ∝ volatility²: 3× on a 30%-vol underlying decays roughly 3.5× as fast as 3× on the S&P's 16%. Even with semis' spectacular long-run returns, SOXL's geometric return gives a large chunk back to the path — the median may look acceptable, but the distribution is enormously wide and the 10th percentile is usually devastating. The five-column comparison shows something counterintuitive: at this volatility level, plain 1× or 25/75 frequently crushes all-in 3× on risk-adjusted terms. If you want to bet on semiconductors, decide first whether you're buying exposure or excitement.

Good fit: short-term and swing traders, or a single-digit percent of the portfolio treated as a convexity bet (an options substitute) — not a core holding.

Watch out: SOXL's 2022 peak-to-trough was about −91%, and −90% needs +900% to recover. It's built for daily trading; the prefilled 34.1% CAGR is a decade inflated by the AI bull run — extremely optimistic.

Common questions

Why is SOXL's long-term return far below "3× SOXX"?: Daily reset + high volatility = a huge compounding gap (volatility decay). "3× each day" is true; "3× over years" is not — and the gap grows with the square of volatility, on the most volatile mainstream index there is.
Can SOXL recover from a 90% drawdown?: It needs +900%, with decay still working against it the whole way. The common pattern is the underlying making new highs while SOXL is still halfway up the mountain — that's the asymmetric damage deep drawdowns do to daily-reset leverage.
I'm long-term bullish on semiconductors — should I buy SOXL?: Usually the better trade is the plain 1× semiconductor ETF, or a small SOXL slice next to a large 1× position. The 50/50 and 25/75 columns above are typically that conclusion, in numbers.
Can I DCA into SOXL to average down?: With a product capable of −90% drawdowns, averaging down is often catching a falling knife: semiconductor down-cycles run one to two years, and you'd be contributing into continuous decay. The survivable version is a small fixed allocation with periodic rebalancing — not buying more the further it falls.
What happens when a leveraged ETF falls too far? Can it be delisted?: After deep declines issuers routinely reverse split to keep the share price tradable (several 3× products have), leaving value unchanged and share count smaller; small leveraged funds do occasionally get liquidated outright. For a holder, the real cost is the recovery math — −90% needs +900% — not the split or delisting itself.

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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