ProShares UltraPro QQQ (2024)

FAQs

Is ProShares UltraPro QQQ a good investment? ›

Although the ProShares UltraPro QQQ has delivered strong returns since its 2010 inception, that is not a guarantee that it will continue to do so. Since it seeks to triple the daily return of the Nasdaq-100, it can go down quickly if the Nasdaq-100 isn't performing well.

While the Fund has a daily investment objective, you may hold Fund shares for longer than one day if you believe it is consistent with your goals and risk tolerance. For any holding period other than a day, your return may be higher or lower than the Daily Target.

Leveraged ETF prices tend to decay over time, and triple leverage will tend to decay at a faster rate than 2x leverage. As a result, they can tend toward zero.

Average Return

In the past year, QQQ returned a total of 30.38%, which is higher than VOO's 27.99% return. Over the past 10 years, QQQ has had annualized average returns of 18.30% , compared to 12.63% for VOO. These numbers are adjusted for stock splits and include dividends.

The QQQ ETF offers buy-and-hold investors low expenses and long-term growth potential with enough diversification to avoid the risks of betting on one company. On the downside, long-term investors in QQQ must deal with sector risk, possible overvaluation, and the absence of small caps.

7 While the Nasdaq-100 is historically more volatile than the S&P 500, QQQ can be held over long time frames while its cousin, TQQQ is definitely a short-term trade.

Cons of SQQQ

Leverage risk: SQQQ's triple leverage is a double-edged sword. Although it offers amplified gains, it also magnifies losses. This high volatility makes it unsuitable for long-term investments and inexperienced investors.

Bottom Line on Leveraged ETFs

Leveraged ETFs decay due to the compounding effect of daily returns, volatility of the market and the cost of leverage. The volatility drag of leveraged ETFs means that losses in the ETF can be magnified over time and they are not suitable for long-term investments.

Historically, SQQQ decays around 7-8% per month, though this would likely be around 4-5% per month during a flat market such as that experienced so far this year.

The 3X ETFs use “total return swaps” to create the leverage. These swaps are settled each day. If the index (in this case, the Russell 1000 Financial Index) goes up consistently, then there's a good chance that the total return of the ETF will approximate 300% of the return on the index.

Are there 4x leveraged ETF? ›

BMO has launched the first quadruple leveraged ETN fund that tracks the S&P 500. The fund will trade under the ticker symbol "XXXX" and seeks to generate four time the S&P 500's return on a daily basis. The launch come as bullishness rise among investors and Wall Street predicts more gains to come in 2024.

The triple leverage can significantly magnify losses, making TQQQ a high-risk, high-reward option. The compounding of daily returns can also lead to tracking error, causing its performance to deviate from three times the index's returns over time.

The price-to-earnings ratio of the average company in the Invesco QQQ Trust is 34.4. That's on the expensive side. However, I still believe it's smart to consider investing. Valuation doesn't matter as much if you have a long time horizon.

QQQ is better to buy for investments of a year or more. The NASDAQ-100 index dynamics are more volatile compared to the S&P 500. With a shorter investment horizon, there's a high risk of a decrease in value.

And the QQQ is cheap, only charging 0.2%. There's an even cheaper version, the Invesco Nasdaq 100 ETF (QQQM), which charges just 0.15%. Compare that to the 0.75% charged by ARK Innovation (ARKK). And ARK Innovation gained just 2.6% annually in the past 10 years.

QQQ has a consensus rating of Moderate Buy which is based on 88 buy ratings, 14 hold ratings and 0 sell ratings.

The table demonstrates that the difference between SPY and QQQ is that the S&P 500 Index and SPY ETF provide much better options for diversification across economic sectors. Despite this, the tech sector accounts for over a third of assets in this fund and is actually 3 times more than the second largest sector.

TQQQ Signals & Forecast

The TQQQ ETF holds a sell signal from the short-term Moving Average; at the same time, however, there is a buy signal from the long-term average. Since the short-term average is above the long-term average there is a general buy signal in the ETF giving a positive forecast for the stock.

ProShares Parent Rating

ProShares fails to showcase longevity across its product shelf, as evidenced by its 10-year success ratio. Over this time period, only 38% of its roster has been able to both survive and beat its respective category median.