In this ETF Battle, Kreinces explains why the Nasdaq-100 (TQQQ) is the “American Dream ETF” and more investors are beginning to take notice.
Video: ETF Battles – SOXL vs. TECL
Watch David Kreinces, CIO of ETF PM, appear on ETF Battles with Ron Delegge at ETFguide and Mike Akins at ETF Action.
Over the trailing 10-years through August 21, Technology 3x (TECL) and Semiconductor 3x (SOXL) returned 48x and 39x your money respectively, while Nasdaq-100 3x (TQQQ) delivered almost 80x. Clearly, certain leveraged ETFs have delivered extraordinary performance long-term.
While the annualized return of TQQQ was just 2.6x the return of the unleveraged QQQ, the 10-year total return of TQQQ was over 13x greater due to the magic of compounding. This means that leveraged ETFs do not need to deliver their full target annual return multiple in order to be useful products. At ETF PM, we believe that using moderate leverage, on strategically balanced portfolios, as shown in the investable benchmarks, will prove to be far more effective long-term than employing old-fashioned unleveraged portfolio diversification.
Harry Markowitz explained that “diversification is a free lunch” and the investable benchmarks show that leveraged diversification can produce a carton of extra retirement nest eggs. Read more about these revolutionary core portfolios in our new book: “Investable Benchmarks: A Guide to ETFs, Technology, and Leverage.”
Given the extraordinary opportunity for investors in certain leading leveraged ETFs, we are now calling TQQQ the “American Dream ETF!” Binge-watch all of ETF PM’s appearances on ETF Battles and let us know which ETFs you want to see in the next episode!