Leveraged ETFs like TQQQ and SSO offer amplified returns but come with higher risk due to daily leverage resets. TQQQ has outperformed SSO but with greater volatility and drawdowns. Investors should consider fees, dividend yield, beta, and sector exposure before investing in these funds.

TQQQ tracks triple the daily returns of the Nasdaq-100, heavily weighted towards tech stocks like Nvidia, Apple, and Microsoft. SSO offers 2x daily S&P 500 exposure with a broader sector mix. Both funds use daily leverage resets, magnifying gains and losses. Investors must be aware of extreme volatility and daily resets when considering these ETFs.

Investors intrigued by leveraged ETFs should understand they provide amplified short-term returns but may not perform as expected over the long term. TQQQ’s drawdown of 82% in 2022 exemplifies the extreme volatility that comes with 2x or 3x leverage. Additionally, both funds charge higher-than-average fees, impacting overall returns.

For those considering leveraged ETFs, it’s essential to evaluate the risks and rewards carefully. While these funds can deliver substantial returns, they also come with higher volatility and fees. Understanding the nuances of leverage, daily resets, and sector exposure is crucial for making informed investment decisions.

Read more at Yahoo Finance: Are They the Right Choice for Long-Term Investors?