Leveraged and inverse ETFs promise a stated multiple of their underlying's move, but only for a single day. Hold one longer and the fund resets its exposure daily, so the results compound rather than simply multiply. Over the three months to October 8, 2026, this showed up clearly: of 622 such funds, 485 finished short of their own stated multiple, with the median fund landing 5.3 points below what the multiple would imply.
The gap is not about which direction the underlying ended up moving. It is about how much ground it covered along the way. The first table shows this pattern across holding periods: at one month, with underlying volatility at a median 38%, the median shortfall was 1.2 points. By three months, with volatility at 47%, the shortfall had widened to 5.3 points. At six months and one year, shortfalls sat near 8.6 to 8.9 points, with volatility still near 35 to 47%. At three years, despite lower median volatility of 20%, the shortfall was 8.7 points, a reminder that even calmer stretches accumulate drift over long enough holding periods.
The third table isolates volatility's role directly, using the three-month window. Funds tracking underlyings with volatility between 0% and 30% showed a median difference of -1.7%, with 115 of 179 funds short of stated. Move up to 30-50% volatility and the median difference deepened to -5.2%, with 126 of 157 short. At 50-80% volatility, the difference was -10.7%, with 144 of 168 short. Among the most volatile group, 80% and above, the median difference reached -16.4%, with 100 of 118 funds short. The pattern is consistent: more turbulence in the underlying means a wider gap between the fund's result and its stated multiple, regardless of where the underlying ultimately settled.
The second table shows that even funds chasing the identical mandate, on the identical underlying, over the identical days, do not land in the same place. Take SMCI +2x: with the underlying up 51.5%, the three funds tracking it ranged from SMCL at -18.3 to SMCC at -24.0, a spread of 5.7 points. MSTR +2x, tracked by four funds against a 61.3% underlying move, spread from MSTC at -9.6 to MSTX at -15.0, a 5.4-point gap. GME +2x, with only two issuers and a 15.2% underlying move, still produced a 6.0-point spread between GMEC at -8.0 and GMEU at -13.9. These differences arise within the same stated mandate and the same market days, pointing to how each fund's own daily mechanics and costs compound differently even when the target is identical.
None of this describes which fund performed better or worse in a way that implies a choice. It describes what holding a daily-reset product for longer than a day has done to the relationship between the stated multiple and the delivered result.
Readers can check any individual fund's current distance from its stated multiple, and the matching underlying's volatility over the same window, on the live desk.