What happens if you hold a leveraged ETF for a year?
Over one year to Oct 20, 2026, 206 of 290 leveraged and inverse ETFs finished short of what their own stated multiple implied over exactly the same days.
The multiple erodes, and how far depends on how much the underlying moved about rather than where it ended up: each window below compares what the funds returned against what their own stated multiple would have produced over those days.
The gap is not a fee and it is not tracking error in the usual sense. It is what compounding does to a levered daily return along a path. It grows with the length of the hold and with the volatility of what is levered.
It does not always run against the holder. In a steady run in one direction, compounding a levered daily return produces more than the multiple times the period move. That is why the table has funds on both sides.
ETFIQ takes no view on how long to hold anything. The figures below are what happened, over several windows.
On ETFIQ today
Points (pts) are percentage points.
| Held for | Funds measured | Fell short | Median difference | Median underlying volatility |
|---|---|---|---|---|
| One month | 656 | 403 of 656 | −1.0 pts | 40% |
| Three months | 656 | 504 of 656 | −4.5 pts | 48% |
| Six months | 427 | 327 of 427 | −7.5 pts | 46% |
| One year | 290 | 206 of 290 | −11.6 pts | 37% |
| Three years | 94 | 63 of 94 | −25.8 pts | 21% |
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ETFIQ, What happens if you hold a leveraged ETF for a year?, data as of Oct 20, 2026. https://etfiq.com/questions/what-happens-if-you-hold-a-leveraged-etf
ETFIQ. (Oct 20, 2026). What happens if you hold a leveraged ETF for a year?. Retrieved from https://etfiq.com/questions/what-happens-if-you-hold-a-leveraged-etf
[What happens if you hold a leveraged ETF for a year? (ETFIQ, Oct 20, 2026)](https://etfiq.com/questions/what-happens-if-you-hold-a-leveraged-etf)
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