How to invest in leveraged ETFs

How can I invest in leveraged ETFs?

Leveraged ETFs are designed to track the daily performance of the underlying index overproportionately. This is achieved through derivatives, which is why leveraged ETFs are always synthetically replicating.

The best way to explain how leveraged ETFs work is with an example: suppose the S&P 500 rises 1 % in value on a given day, then a 2x leveraged ETF on the S&P 500 will rise by around 2 % in value on that day. If the S&P 500 loses 1 % in value, the double leveraged ETF will fall by approximately 2 %. Approximately 2 % because the ETF costs (TER, transaction costs) need to be taken into account. These tend to be significantly higher for leveraged ETFs than for ETFs that track the same index without leverage.

In addition, leveraged ETFs carry a much higher risk than ETFs that track the underlying index without leverage. Firstly, it is obvious that leveraging the performance by a certain factor increases price fluctuations by that very factor. Secondly, the so-called path dependency must also be taken into account when it comes to leveraged ETFs.

The concept of path dependency can also be most easily illustrated with an example:

Example 1: S&P 500 first drops, then rises

Example 2: S&P 500 rises first , then drops

For our example, we assume that a regular S&P 500 ETF starts at a price of 100 €, falls by 5% on the first day and recovers to its initial value of 100 € (+5.26%) on the following day. A double-leveraged S&P 500 ETF, on the other hand, would only be worth around 99.5 € on the second day. This relatively small discrepancy accumulates over time and can have a significant impact on returns in the long run. This effect is known as the ‘volatility drag’ and also applies if the ETF price initially rises and then drops, as illustrated in our second example.

The more an investment fluctuates in value, the stronger the volatility drag. Consequently, leveraged ETFs are especially affected by this and exhibit a structural disadvantage compared to non-leveraged products, particularly in volatile markets.

On the flip side, this means that leveraged ETFs do well when markets are rising with low volatility.

To summarise, leveraged ETFs carry a much higher risk than non-leveraged ETFs and are therefore, in our view, not suitable for a long-term buy-and-hold approach, especially if you are a fairly inexperienced investor.

In this ETF guide, you will find all currently available leveraged ETFs. This does not include ETFs that track the underlying index both leveraged and inversely. These short & leveraged ETFs can be found in our ETF guide on short ETFs.

 

The best Leveraged ETFs by 1-year fund return as of 30.04.26

All leveraged ETFs ranked by fund return

The largest Leveraged ETFs by fund size in EUR

All leveraged ETFs ranked by fund size

The cheapest Leveraged ETFs by total expense ratio

All leveraged ETFs ranked by total expense ratio

Besides return, there are further important factors to consider when selecting a leveraged ETF. In order to provide a sound decision basis, you find a list of all leveraged ETFs with details on size, cost, age, use of profits and fund domicile ranked by fund size.

Compare all leveraged ETFs in detail
Compare all leveraged ETFs in a chart

Source: justETF.com; As of 08.05.26

Return comparison of all leveraged ETFs

The table shows the returns of all leveraged ETFs in comparison. All return figures are including dividends as of month end. Besides the return the reference date on which you conduct the comparison is important. In order to find the best leveraged ETF you can also perform a chart comparison.

• Cumulative
• Calendar year

Source: justETF.com; As of 30.04.26; Calculations in EUR including dividends