Over the past 5.6 years, certain leveraged ETFs were leading growth investments. The Semiconductor 3x ETF (SOXL) gained 2,345% and the Nasdaq 100 3x (TQQQ) rose by 1,322%, while Amazon (AMZN) and Facebook (FB) returned 609% and 550%, respectively.
SOXL’s gain was almost 20 times the S&P 500 (SPY) total return of 120%, and almost four times the Amazon (AMZN) gain of 609%. Note, SOXL and TQQQ are both leading equity trends again this year, and they are both components in the aggressive growth investable benchmark.
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: 4/18, 1/18, 9/17, 3/17, 1/17, and 9/16.
Contact ETF PM to learn more.