# Leveraged and inverse ETFs

> Learn what a 3x or -3x ETF promises, why it resets every day, and why a month's result differs from 3 times the index, using real TQQQ and SQQQ data.

Data as of Nov 10, 2026. Rebuilt every trading night.

## Leveraged and inverse ETFs: what the daily promise means

Data as of Nov 10, 2026. Rebuilt every trading night.

Over 30 days to Nov 10, 2026 , QQQ fell 10.2% and TQQQ, a 3x fund, fell 30.4% , not the 30.6% 3 times QQQ implies.

Trading Products and Costs · Lesson 4 of 6 1 2 3 4 5 6

Slide the amount. Compare the index, 3 times the month, 3 times each day compounded, and the fund. Amount (hypothetical) $10,000 On $10,000: QQQ −$1,018, 3 times the month −$3,055, 3x each day, compounded −$2,988, TQQQ −$3,041, SQQQ: -3 times the month $3,055, SQQQ: -3x each day, compounded $3,033, SQQQ $3,220. Hypothetical amounts. The 30 days to Nov 10, 2026. Step 1: the daily promise, kept. Over the window's 22 trading days, TQQQ missed 3 times QQQ's daily return by 0.129 points a day on average ( 12.9 basis points), tiny next to daily targets of several percent. Step 2: what the month looked like. QQQ fell 10.18% . Three times that is −30.55% . Step 3: what the daily multiple gives. Apply 3x to each day's move and compound the days: −29.88% . TQQQ actually returned −30.41% . Compounding against 3x the month: −29.88 − ( −30.55 ) = +0.67 points . TQQQ against the daily multiple: −30.41 − ( −29.88 ) = −0.54 points : fees, plus the cost of holding $3 of exposure for each $1 of cash. Step 4: the inverse side. SQQQ returned +32.20% , against +30.55% for −3 times the month and +30.33% for the daily multiple compounded. Compounding against −3 times the month: +30.33 − ( +30.55 ) = −0.22 points . It finished above its own daily multiple by +32.20 − ( +30.33 ) = +1.87 points . An inverse fund keeps its cash as collateral and earns interest on it, so its gap is often positive.

### The question

A fund says "3x QQQ". If QQQ rises 10% this year, do I get 30%?

### The idea

- A leveraged ETF aims to return a multiple of an index's move, such as 2 or 3 times. An inverse ETF aims for the opposite, such as −1 or −3 times. The promise has one word that changes everything: daily . The fund targets its multiple for each day only .

- To do that, it resets every day. Picture a hypothetical 3x fund worth $100 with $300 of exposure (the amount of the index it gains or loses on, held through futures or swaps): - The index rises 10%. The exposure gains $30, so the fund is worth $130. To be 3x again, it needs $390 of exposure, so it adds $60 .

- The index then falls 10%. The fund loses $39 and is worth $91 .

- The index went 100 → 110 → 99: down 1% . Three times that is −3%, but the fund is down 9% . Each day was exactly 3x; the two days together were not. Beyond one day, the path decides the result.

### Worked example

The 3 steps beside the drawing at the top work this through on ETFIQ data. Point at a step to light the part of the drawing it describes.

TQQQ targets 3 times QQQ's daily return; SQQQ targets −3 times . Window: the 30 days from Oct 9, 2026 to Nov 10, 2026 .

Neither fund delivered 3 times the month's move. Both did what they promise: 3 times each day.

### The common mistake

"A 3x fund gives me 3 times the index over whatever period I hold it." It gives 3 times each day. Over a month or a year, a steady trend can beat 3 times the move; choppy days can fall well short. Lesson 5 measures that shortfall.

### Check your understanding

Pick an answer to see why. Two of three right passes the lesson.

1. What does a 3x daily leveraged ETF aim to deliver? A 3 times the index's return each day, before fees B 3 times the index's return over any holding period C 3 times the index's yearly return D 3 times the index's gains but only 1 times its losses Answer: A. 3 times the index's return each day, before fees. the target applies to one day and resets daily. Not B: over longer periods the resets compound along the path. 2. An index rises 5% one day and falls 5% the next (hypothetical). About what does a perfect 2x daily fund return over the two days? A −0.5% B −1% C 0% D +0.5% Answer: B. −1%. 1.10 × 0.90 = 0.99, a 1% loss. Not A: the index fell about 0.25% (1.05 × 0.95 = 0.9975), and 2 times that is −0.5%, but the fund compounds each day's 2x move. 3. In the 30 days to Nov 10, 2026 , SQQQ returned more than −3 times QQQ's move. What explains the extra? A SQQQ changed its multiple B The data is wrong C QQQ's fee is higher D Interest earned on its collateral, on top of its daily multiple Answer: D. Interest earned on its collateral, on top of its daily multiple. compounding changed the result by −0.22 points against −3 times the month, and the fund finished 1.87 points above its daily multiple, where an inverse fund's collateral interest shows up. Not A: the multiple stayed −3 daily; the gap came from collateral interest.

### Takeaways

- A leveraged or inverse ETF promises its multiple for one day at a time.

- Over longer periods, the path decides: steady trends can help, choppy days hurt.

- Check a fund's daily miss on its Tracking tab and its period result on the leverage desk.

### Do it on ETFIQ

Check how closely your fund hits its daily target Your fund

### Where to next

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Source: ETFIQ, independent ETF data. Recomputed nightly from public filings and prices.
Cite: ETFIQ, Leveraged and inverse ETFs: what the daily promise means, data as of Nov 10, 2026. https://etfiq.com/academy/trading-products-and-costs/leveraged-and-inverse-funds/
Licence: https://etfiq.com/license/ Data ETFIQ computes is free to use with attribution: ETFIQ (etfiq.com). Issuer data stays under its owner's terms.
HTML: https://etfiq.com/academy/trading-products-and-costs/leveraged-and-inverse-funds/