Leveraged and inverse ETFs promise a fixed multiple of their underlying's move, but that promise is reset and recalculated every single day. Over the three months to September 30, 2026, 446 of 594 such funds finished short of their stated multiple, with the median fund landing 4.6 percentage points below it. This is not a flaw in any one fund. It is how daily compounding works: a 2x fund that delivers exactly twice the daily return, day after day, will not deliver exactly twice the return of the whole period once the underlying has moved up and down along the way. The median distance traveled by the underlying over the three months was 5.8%, a number that captures the total path, not just the net destination.
Holding period changes the shape of this gap. Over one month, the median fund was off by 1.4 points; over six months, 8.9 points; over a year, 9.5 points; over three years, 11.9 points. The underlying's volatility moves in step: median volatility was 42% at one month, climbed to 48% at three months, then fell back as the window lengthened. The pattern across the volatility table is direct. Funds tracking underlyings with volatility of 30% or less had a median difference of -1.7%, and 113 of 179 still fell short. At the other end, funds tied to underlyings with volatility of 80% or more showed a median difference of -15.5%, with 101 of 120 falling short. The gap widens with how far the underlying traveled along the way, not with where it ended up.
Where the same underlying and the same stated multiple are offered by more than one issuer, the table of 81 such cases shows that identical mandates over identical days do not produce identical results. MSTR at +2x, offered by four issuers while the underlying rose 63.9%, shows a spread of 6.9 percentage points between the closest fund (MSTC, -6.7) and the furthest (MSTX, -13.6). GME at +2x, with two issuers and the underlying up 8.9%, spans 6.6 points between GMEC (-6.9) and GMEU (-13.5). Smaller spreads appear too: AMD at +2x, across four issuers, spans 2.2 points between AMDC (-13.2) and AMDL (-15.5). These differences arise from the same mechanical process, daily resetting and compounding, applied by separate funds to the same underlying over the same stretch of days.
None of this describes a fund failing to do what it says. A leveraged or inverse ETF is built to deliver its multiple over a single day, and the fine print says so. What the tables show is the distance between that daily promise and what a holder sees when they check their position weeks, months, or years later, a distance that grows with the up-and-down motion of the underlying rather than its final level.
Readers can check any individual fund's stated multiple, its underlying, and its reinvested return over their own chosen window on the live desk.