Over the past five years, the Semiconductor 3x ETF (SOXL) rose by 2,040% while Nvidia (NVDA), one of its largest holdings, gained 1,568%.
SOXL’s gain was 19 times the S&P 500 (SPY) total return of 107%, and over 5 times the Amazon (AMZN) gain of 366%. Note, SOXL and the Nasdaq 100 3x (TQQQ) both delivered extraordinary performance last year, and they are components in the aggressive growth investable benchmark.
Risk Control
Still, past performance can never guarantee future results, and leveraged ETFs often do not deliver the exact multiple of the underlying index return they target. Investors should be careful to engage leverage slowly and cautiously.
We also encourage investors to employ active trend following risk controls when making portfolio allocations using leverage.
As per Greek philosopher Heraclitus, “Life is Flux,” meaning “all things change.” Given this truth, and the wide range of economic environments, the leading growth investments are certain to change over time.
See prior blogs: 1/18, 9/17, 3/17, 1/17, and 9/16.
Contact ETF PM to learn more.
