The Nasdaq-100’s latest market swings are exposing an uncomfortable reality for investors betting on leveraged ETFs. ProShares UltraPro QQQ (NASDAQ:TQQQ), which targets three times the index’s daily returns, is struggling to keep pace with its unleveraged counterpart, Invesco QQQ Trust (NASDAQ:QQQ).
The difference has become particularly striking in 2026. As of Thursday, TQQQ was down approximately 3.71% year to date, while QQQ had gained 5.69%. Meanwhile, the Nasdaq-100 index also grew
That means a hypothetical $10,000 investment in TQQQ at the beginning of the year would have fallen to approximately $9,629. The same investment in QQQ would have grown to around $10,569, assuming reinvested distributions.
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Why Isn’t TQQQ Delivering Three Times the Returns?
The answer lies in how leveraged ETFs work.
TQQQ does not promise three times the Nasdaq-100’s return over weeks, months or years. Instead, it targets three times the index’s performance on a daily basis, resetting its exposure every trading session.
That daily reset creates a compounding effect that can work against investors when markets experience repeated swings.
Consider a simplified example. If the Nasdaq-100 gains 10% one day and loses 10% the next, an investment of $10,000 would first rise to $11,000 before falling to $9,900, resulting in a 1% loss.
A hypothetical 3X fund would gain 30% on the first day, taking the investment to $13,000, but lose 30% the next day, leaving just $9,100. That’s a 9% loss.
The underlying index would have lost only 1%.
The Longer-Term Performance Gap
TQQQ’s long-term performance shows both the potential and limitations of leveraged ETFs. According to fund performance data as of Oct. 31, Invesco QQQ delivered an annualised 10-year return of 20.26%, while ProShares UltraPro QQQ generated 38.29%.
Over the decade through Oct. 31, a hypothetical $10,000 investment in QQQ would have grown to approximately $63,500, while the same investment in TQQQ would have ballooned to nearly $239,800, assuming distributions were reinvested. However, TQQQ’s 38.29% annualised return was still well below the 60.78% implied by simply tripling QQQ’s CAGR, underscoring why daily leverage does not translate into three times the long-term returns.
The difference reflects TQQQ’s daily reset mechanism.
The fund targets three times the Nasdaq-100’s daily performance, not three times its cumulative or annualised returns. Market volatility, the sequence of daily gains and losses, and compounding can significantly influence its longer-term performance.
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