I used to be not too long ago requested what the story was with ProShares UltraPro QQQ (NASDAQ:TQQQ). On the time, all I knew about it was that it was a leveraged ETF which permits traders who haven’t got margin accounts to spice up their good points or losses within the Invesco QQQ ETF (QQQ) by an element of three.
I had learn studies posted in on-line boards of traders making hefty income with TQQQ. However I additionally knew that Vanguard hasn’t allowed traders to purchase TQQQ or every other leveraged ETFs on their brokerage platform since January of 2019. They defined they banned this type of buying and selling because it was too dangerous for the purchase and maintain traders the corporate helps.
As may very well be anticipated, that prohibition has made leveraged ETFs like TQQQ extra enticing to a sure form of investor who assumes they’re being barred from guaranteeing investments as a result of Wall Avenue desires to maintain all of the actually good things for themselves.
So what is the reality of the matter? Is TQQQ a means for the little man to make large cash, or is it simply one other a lot too dangerous get-rich-quick mirage that can depart naive retail traders hurting?
What Is A Leveraged ETF?
The distinctive promoting proposition behind leveraged ETFs is that for a comparatively excessive price you’ll be able to make investments a small sum of money in a inventory index and earn a a lot larger return than you’ll get when you put the identical sum of money into an everyday, unleveraged ETF that tracked the identical index. Not solely that, however you are able to do this while not having to be permitted for a margin account or indulging in any form of sophisticated investing technique. Simply purchase the ETF and let the ETF supplier work the Wall Avenue magic that provides you two or thrice as a lot return as you’d get when you simply purchased a plain vanilla index monitoring ETF.
TQQQ is a 3x leveraged ETF. It’s as extremely leveraged because the SEC at the moment permits any ETF to be. TQQQ’s acknowledged objective is to ship thrice the every day achieve or lack of QQQ. There’s nevertheless no assure that you’ll really obtain this outcome, although TQQQ seems to have delivered on that promise more often than not over the comparatively quick time they’ve been in operation. TQQQ solely began buying and selling in 2010.
You pay for the privilege. Leveraged ETFs are costly. ProShares tells us that TQQQ’s efficient expense ratio is 0.95%, although it additionally states its gross expense ratio is larger at 1.01%. This distinction could characterize a brief price concession provided to draw extra traders. That is 5 instances the 0.20% expense ratio of QQQ.
There are different, hidden bills which are a byproduct of the way in which that TQQQ achieves its leverage. Moreover paying the expense ratio that reimburses the fund firm for offering the ETF, leveraged ETFs additionally bear the prices of the spinoff buying and selling that gives their extra return, the prices of every day rebalancing of its holdings, and the prices of sustaining the massive quantity of low yielding very short-term bonds they maintain to offer the money wanted for all their shopping for and promoting.
TQQQ’s Rewards Are Apparent
You possibly can’t talk about leveraged ETFs for various minutes earlier than the time period “threat” reveals up. Everybody acknowledges they’re very dangerous. However traders know that top dangers usually end in equally excessive rewards. That has actually been the case with TQQQ. We’ll take a look at these rewards first, earlier than probing extra deeply into the specifics of the dangers that include pursuing them.
Buyers Purchase And Maintain TQQQ Lengthy-term As a result of Doing So Offered Extraordinarily Excessive Returns Throughout The Tech Bull Market
Buyers who purchased TQQQ simply after QQQ hit its lowest worth in March 2020 and who held it for precisely a single yr achieved a exceptional return, incomes 258% on their authentic funding. That return dwarfed the already spectacular 64.67% return of the plain vanilla QQQ ETF over the identical interval.
TQQQ and QQQ 1 Yr Return Beginning March 26, 2020
In A Robust Bull Market TQQQ Delivered Extra Than 3x Returns
The outsized long-term achieve TQQQ revamped a year-long interval are hanging, particularly in view of the truth that ProShares warns traders very strongly that TQQQ ought to solely be held for a single day and that its outcomes compound in an unpredictable means if held longer than a single buying and selling day because of the ETF resetting every day and the influence of leverage compounding.
Clearly, in a raging bull market just like the one which QQQ skilled after March 2020 the “unpredictable” compounding drastically elevated the share worth. The worth return on TQQQ was nearly 4 instances that of QQQ, not the thrice that ProShares goals to offer the day dealer.
However on condition that ProShares insists so strongly that TQQQ is just meant for use by day merchants, you may ask, why am I even bothering to point out the return of TQQQ over a complete yr?
The reason being easy: regardless of the warning, many retail traders have been making long-term purchase and maintain investments in TQQQ and different extremely leveraged ETFs at the very least since 2019.
Hedgefundie’s Wonderful Journey Popularized Purchase And Maintain Investing In 3x ETFs
It was in 2019 that information of a supposedly protected means to make use of 3x leveraged ETFs technique started to unfold across the many investing communities on the web. The technique was referred to as Hedgefundie’s Wonderful Journey, which was normally abbreviated as HFEA. The technique first emerged in a discussion board put up written by somebody who referred to as himself Hedgefundie and unfold across the web, and instantly provoked numerous dialogue. Curiosity within the technique grew in the course of the COVID-19 lock downs when a technology of younger folks, found how a lot cash may very well be made, shortly and simply, through the use of leverage in a market the place “stonks can solely go up.”
When you’ve got nothing higher to do for the subsequent month or two, you’ll be able to learn the greater than 15,000 posts discussing the HFEA technique in excruciating element on the Bogleheads Discussion board.
The HFEA technique as first acknowledged used a special 3x ProShares ETF, the ProShares UltraPro S&P500 (UPRO). That is one other 3x leveraged ETF like TQQQ, but it surely tracks the S&P 500 index, reasonably than the Nasdaq 100 Index that QQQ tracks. Because the COVID lockdowns juiced up the income of QQQ’s Tech shares, TQQQ’s return accelerated and exceeded these of UPRO. This satisfied many traders to go all in with TQQQ. In search of Alpha’s Flows web page for TQQQ tells us that over the previous three years TQQQ’s property below administration have elevated by a whopping 374.75%.
The potential return of TQQQ is thus very apparent. There’s additionally a reciprocal threat that’s equally apparent.
When Stonks Go Down TQQQ Goes Down A Entire Lot Extra: The Greatest Understood Threat Of Leveraged ETFs
Under you see the return of TQQQ for the reason that starting of 2022. Although not fairly 3x the already painful 20.88% lack of QQQ, TQQQ’s lack of 55.69% was devastating for anybody who invested at first of 2022.
TQQQ and QQQ Return Since Jan 2, 2022
HFEA Buyers’ Hedging Failed Miserably
HFEA’s declare to be a protected option to spend money on 3x leveraged ETFs was based mostly on the thought you possibly can buffer potential losses by additionally investing in a second 3x leveraged ETF, the Direxion Day by day 20+ Yr Treasury Bull 3X Shares ETF (TMF), which leveraged a wager on a protracted Treasury bond index.
The thought was that the lengthy bond was more likely to transfer in the other way because the inventory index if shares fell as a result of that was what had normally occurred throughout previous market declines. Many years of educational backtesting had certainly discovered that the worth actions of lengthy bonds have been both uncorrelated or inversely correlated with these of inventory indexes. Sadly, HFEA traders, like most of us, had solely a fuzzy understanding of what the statistical time period “uncorrelated” actually means.
As HFEA traders have now realized, bonds being uncorrelated with shares didn’t imply that they’d transfer in the other way of shares. In statistics, “uncorrelated” merely implies that two numbers will transfer in ways in which aren’t linked to one another in a predictable means. Uncorrelated bonds have largely gone up when shares go down over the previous 40-year bull market in Bonds, however there isn’t a motive they should carry on doing that. Since January 2022, in actual fact, Treasury bonds have dropped simply as a lot as shares have, generally extra. The 3x leveraged 30-year Treasury ETF, TMF, is down 50.48% YTD nearly as a lot as is TQQQ. That is as a result of charges have been constantly falling throughout a lot of the backtested interval. Now they’re constantly rising.
Lesson Realized: There is no such thing as a protected option to make triple returns with leveraged ETFs.
The Different Lesson Realized: Backtesting works nice till the circumstances change that specify your backtested outcomes.
I point out these classes as a result of they’re related for individuals who depend on TQQQ’s backtested outcomes.
The Classes Buyers Have Taken From TQQQ’s Current Rise And Fall
Regardless of its current collapse, traders who invested in TQQQ early sufficient to get piece of that 258% achieve are nonetheless forward on their authentic funding even after shedding 55%, which is why the technique of investing in TQQQ nonetheless appeals to many traders. One can find them on Bogleheads and different web venues urging others to proceed to observe their passive purchase and maintain technique, as they assume that QQQ will resume its relentless transfer upward if they’re simply affected person. They imagine that the eventual outsize income they’ll make when upwards momentum resumes will make up for his or her momentary losses.
Different traders, together with some authors who’re publishing articles right here on In search of Alpha, have drawn a special lesson from this yr’s TQQQ worth action–that it’s best to solely spend money on QQQ when shares are going up.
That technique was first laid out by investing guru (and famous comic) Will Rogers on Halloween in 1929:
Do not gamble; take all of your financial savings and purchase some good inventory and maintain it until it goes up, then promote it. If it do not go up, do not buy it.
Good luck getting that technique to give you the results you want! Bull markets are solely apparent when they’re nearly over.
Leverage Decay Poses One other Nicely-Identified, If Not Nicely-Understood, Threat
The explanation ProShares warns traders that the 3x leverage TQQQ affords can solely be achieved for a single day is that while you maintain a 3x leveraged ETF for an extended interval, an element referred to as leverage decay kicks in. That is, we’re instructed by ProShares, as a result of the holdings of the ETF are rebalanced every day and the influence of the leveraging used to realize the every day achieve or loss compounds in surprising methods over longer intervals of time, significantly in risky markets.
The reasons for precisely how this decay may work are extraordinarily sophisticated and even educated folks will squabble about how precisely it operates. You possibly can learn a really detailed rationalization of how TQQQ’s leverage decay may work on this mathematically complicated In search of Alpha Article by Warwick Langebrink, who’s an funding skilled with years of senior degree skilled investing expertise. If nothing else, studying that article ought to persuade you that there isn’t a means you’ll ever actually have the ability to perceive how TQQQ’s decay could behave except you might have taken a number of years of school arithmetic, and even which may not be sufficient.
What some critical backtesting will let you know, nevertheless, is that generally the compounding behind “leverage decay” works in your favor. That “generally” seems to be raging bull markets just like the one we noticed get underway in late March 2020. The unpredictable compounding can compound good points, not simply losses.
It’s as a result of the warnings about decay damaging returns didn’t show to be true over the last two years the place QQQ’s raging bull market made for optimistic impacts from compounding that so many traders at the moment are satisfied that decay was not one thing they needed to fear about.
In truth, although, as a result of momentum performs such an enormous position in TQQQ’s leverage compounding, if momentum turns adverse and stays adverse, that decay can time beyond regulation trigger higher losses than that 3x multiplier and excessive expense ratio and fund buying and selling prices would predict.
Langebrink additionally tells us that decay will work in opposition to us in risky markets that are not heading clearly up or down.
A lot for the plain dangers. The extra harmful dangers aren’t these, however others which are not often mentioned. To grasp them, we’ve got to look at TQQQ’s acknowledged methodology and holdings.
We Aren’t Given Sufficient Info to Perceive TQQQ’s Methodology
One of many time-tested Golden Guidelines of investing, one that’s proper up there with “do not chase yield” within the record of the Golden Guidelines that traders maintain fooling themselves they’ll ignore is that this: Do not spend money on issues you do not perceive. And as we’ll see, it’s the problem in understanding what TQQQ is doing that poses its best threat.
As traders ought to at all times do when contemplating investing in an ETF, I went to the ProShares web site web page for TQQQ and browse the 2 prospectuses ProShares gives for this ETF. One is a Abstract Prospectus, the opposite the Statutory Prospectus.
What instantly stood out to me after studying the prospectus is that, in contrast to what I discovered in another Various technique ETFs I’ve not too long ago investigated, ProShares tells us little or no in regards to the precise methodology it makes use of to ship the spectacular outcome its goals for.
We’re instructed that it tracks the Nasdaq 100 Index (NDX), which is identical index QQQ tracks. ProShares additionally tells us that, “The Fund invests in monetary devices that ProShares Advisors imagine, together, ought to produce every day returns per the Fund’s funding goal.” These devices embody:
- Futures contracts
- Treasury Payments
- Repurchase Agreements
They inform us that the Swaps and Futures Contracts are derivatives and that the Treasury Payments and Repurchase Agreements are money.
Buyers, nevertheless, are given no perception into how the swaps, futures and money are used. ProShares tells us solely that it makes use of what it calls “a mathematical method.” That data is all we get, aside from some details about what methods ProShares does not use. They inform us,
ProShare Advisors doesn’t make investments the property of the Fund in securities or monetary devices based mostly on ProShare Advisors’ view of the funding advantage of a selected safety, instrument, or firm, nor does it conduct standard funding analysis or evaluation or forecast market motion or developments.
We’re additionally instructed that although the fund goals to rebalance every day,
The time and method wherein the Fund rebalances its portfolio could fluctuate from day after day on the discretion of ProShare Advisors, relying on market circumstances and different circumstances. The Index’s actions in the course of the day will have an effect on whether or not the Fund’s portfolio must be rebalanced.
This assertion would not make it clear the extent to which this rebalancing is finished opportunistically with human intervention or whether it is adjusted by some algorithm.
Warwick Langebrink spends many paragraphs in his article making extremely educated guesses as to what TQQQ is doing with its property, however when all is claimed and finished, they’re solely guesses.
With TQQQ you’re shopping for an funding you can not perceive. All you’ll be able to depend on is backtesting, and because the of us who invested within the HFEA technique realized, 40 years of backtesting is not sufficient to avoid wasting you when you do not perceive what you’re doing. TQQQ solely gives us with 12 years.
What are TQQQ’s Holdings?
Once I downloaded the record of TQQQ’s holdings as of 5/03/2022 it is a abstract of the numerous line gadgets I discovered listed:
|Funding Kind||Holding||Publicity Worth (Notional + GL)||Market Worth|
|Money||13 Treasury Payments of various quantities||$4.13 Billion|
|Inventory||The 100 Shares Held by QQQ in similar % Weights as in QQQ||$13.24 Billion|
|Futures||NASDAQ 100 E-MINI EQUITY INDEX 17/JUN/2022 NQM2 INDEX||$1.39 Billion|
|Swaps||13 NASDAQ 100 Index Swaps with Completely different Funding Banks||$26.40 Billion|
|TOTAL||$27.79 Billion||$17.37 Billion|
Supply: Information from ProShares, Desk and Funding Kind by Writer
The banks concerned with the 13 swaps are Financial institution of America, Barclays, BNP Paribas, Morgan Stanley, UBS, JP Morgan, Goldman Sachs, Citibank, and Societe Generale.
The Inventory Part in TQQQ is the Similar as in QQQ And Topic to Its Valuation Issues
Because the return of TQQQ multiplies that of QQQ, for future returns to be value pursuing traders should imagine that the shares in QQQ nonetheless have room to run. ProShares provides us solely two valuation metrics for these shares, dated as of March 31, 2022. At the moment the general P/E ratio of the inventory portion of its portfolio was 29.07. The worth to e-book ratio was 8.1. You could find many articles discussing the valuation of QQQ, so I will not go into that subject in depth.
However as those that observe QQQ know, although it holds 100 shares, its worth is extraordinarily concentrated within the shares of solely 10 mega cap shares, which collectively as of March 31, 2022 made up 53.70% of your entire worth of the ETF. 5 of these shares, Apple, Microsoft, Alphabet, Amazon, and Tesla made up 42.37% of QQQ’s complete worth. Most of the different 100 holdings of TQQQ are semiconductor shares.
QQQ additionally features a random mixture of non-Tech shares. That’s as a result of, by definition, the one issue that the shares within the Nasdaq 100 index share is that they’re the 100 largest cap shares that initially IPO’d on the Nasdaq alternate. There’s nothing that claims they should be tech shares, progress shares, or “modern” shares although QQQ touts itself as holding “corporations shaping the longer term” and “a few of the world’s most modern corporations.” It additionally holds corporations that promote rail freight providers, smooth drinks, ketchup, and screws.
Given the significance of momentum to TQQQ’s long-term efficiency, solely traders who imagine that these prime shares can proceed to carry out strongly ought to spend money on TQQQ.
The Derivatives Part in TQQQ
Swaps and Futures are outlined as “Derivatives” within the prospectus. Most of us have some thought of what Futures characterize. However I had no thought what Swaps or “Publicity Worth” meant right here. So I went and browse by way of some 5 completely different definitions of what the time period Swap means in an funding context, all of which just about stated the identical factor and didn’t make a lot sense to me. An excellent instance is that this one from The Company Finance Institute:
A swap is a spinoff contract between two events that entails the alternate of pre-agreed money flows of two monetary devices. The money flows are normally decided utilizing the notional principal quantity (a predetermined nominal worth). Every stream of the money flows known as a “leg.”
These definitions inform us that there are 4 sorts of swaps, Curiosity Charge Swaps, Foreign money Swaps, Commodity Swaps, and Credit score Default Swaps. The commonest ones are apparently Curiosity Charge Swaps and Foreign money Swaps. Nowhere on-line might I discover something that defined what a swap on a inventory index may contain. ProShares’ prospectus for TQQQ repeats the usual definition and solely provides this,
The gross return to be exchanged or “swapped” between the events is calculated with respect to a “notional quantity,” e.g., the return on or change in worth of a selected greenback quantity invested in a “basket” of securities or an ETF representing a selected index.
I do not assume I am an entire lot dumber than the typical investor, however I got here away admitting that I do not know what any of this implies.
All I can work out in regards to the Publicity merchandise is that it’s the worst-case quantity that the ETF must provide you with based mostly on its present holding of swaps and futures. And that the publicity is larger than the quantity of shares and short-term bonds held.
Swap Counterparty Threat
Mulling all this over led me to surprise why the most important funding banks on the planet can be promoting TQQQ the derivatives that permit it to make such outsized income. We all know these banks are within the enterprise of constructing obscene good points of their very own and we additionally know that after they do allow us to little guys get a chunk of one thing that appears significantly juicy there’s usually a catch.
The reply could lie buried on this wordage buried within the Threat Part of TQQQ’s Abstract Prospectus:
… if the Index has a dramatic intraday transfer that causes a fabric decline within the Fund’s internet property, the phrases of a swap settlement between the Fund and its counterparty could allow the counterparty to right away shut out the transaction with the Fund.
We’re then instructed that if this occurs, QQQ might later reverse course in the course of the day, however traders would nonetheless lose out. This might occur in uneven markets and ship a really completely different outcome than what purchase and maintain traders anticipate. In truth, backtesting tells us it has most likely already occurred. As noticed on this discussion board put up,
“From 6/1/2011 by way of 1/31/2012, a $10,000 funding would have made $452 in QQQ however misplaced -$223 in TQQQ.”
TQQQ Comes With Too Many Unquantifiable Dangers
That Counterparty Threat is just one of many non-obvious dangers that threaten traders who spend money on TQQQ. There are a number of different dangers that not often get mentioned as a result of traders focus on worth decline threat and leverage decay when discussing the subject of threat.
TQQQ Is A Momentum Play Which Harms Purchase and Maintain Buyers if Momentum Gathers Velocity Downwards
Even when counterparties do not shut out their swaps if it seems like they’ll lose cash, the dependence of QQQ’s long-term profitability on upward momentum is a big threat that the purchase and maintain traders in these triple leveraged index ETFs wave away.
The various years when QQQ has been relentlessly bullish with solely very temporary declines that shortly reversed has satisfied many purchase and maintain traders, just like the one who wrote the abstract I linked above, that TQQQ is protected to carry long run.
The argument they advance that’s alleged to clinch that is that even with the dramatic decline in March of 2020 purchase and maintain traders did simply positive. However that argument ignores that the 2020 decline reversed inside every week of its March 16 low level after which went on to realize a once-every-couple-decades achieve over the subsequent yr and a half.
Leverage decay works within the investor’s favor in an upward trending market. But when a sustained bear market happens, the place shares reverse course and development downwards for a yr and a half as they did in 2000-2002, the leverage decay will transfer more and more in opposition to the investor. I took from Langebrink’s article that was cited above the concept that traders can even endure from leverage decay when the market trades flat however with numerous volatility, too.
Counting on backtesting is harmful, as HFEA traders realized whose backtesting assured them that Treasury bonds went up when shares dropped. Buyers who draw their conclusions about how TQQQ will behave based mostly on the way it did throughout a interval when QQQ was in a as soon as in a technology bull market that skilled solely very quick and fast-recovering declines might be taught some painful classes.
Rising Charges On account of Inflation Are More likely to Increase the Prices of Leverage Methods
TQQQ and different 3x leveraged ETFs have solely traded throughout a interval of extraordinarily low rates of interest. Charges have already risen and are more likely to rise some extra. That can improve the prices of any form of mortgage, and will very properly improve the prices of investing with the derivatives that TQQQ makes use of.
The Massive Banks Who Do Swaps Could Increase Their Price Or Refuse to Supply Them In Poor Market Situations
Since ProShares warns us that banks could prematurely shut their swaps if a single day’s buying and selling goes in opposition to them, we’d be properly suggested to think about that if QQQ’s momentum continues to development downwards, these banks could not wish to enter into the swaps that TQQQ wants to realize its targets.
Right here, once more, we’re solely speculating as a result of we retail traders cannot start to know the motivations of the large funding banks that promote the derivatives that make TQQQ’s technique doable. So we won’t actually know at what level the price of their technique or the lack of ProShares to proceed to make use of it would trigger the income to evaporate–or the ETF to should shut down.
FINRA Is Exploring “Measures” that Could Shut Down or Restrict Buying and selling in Extremely Leveraged ETFs
I knew early on in my researches that the SEC has publicly expressed its worries in regards to the hazard leveraged ETFs pose for retail traders. But it surely was solely once I opened TQQQ’s statutory prospectus that I used to be greeted on its first web page by the next vital warning, which I had not seen in ProShares’ Abstract Prospectus or different documentation.
RISKS OF GOVERNMENT REGULATION The Monetary Business Regulatory Authority (“FINRA”) issued a discover on March 8, 2022 searching for touch upon measures that would forestall or prohibit traders from shopping for a broad vary of public securities designated as “complicated merchandise” – which might embody the leveraged and inverse funds provided by ProShares. The last word influence, if any, of those measures stays unclear. Nevertheless, if rules are adopted, they may, amongst different issues, forestall or prohibit traders’ capability to purchase the funds.
This poses an enormous threat to anybody who invests in these leveraged ETFs due to the likelihood that the ETFs may very well be shut down or that solely rich certified traders can be allowed to commerce them.
Restrictions or the shutting down of those ETFs wouldn’t be an issue for individuals who use them to day commerce, which, as we noticed, is how the corporate very clearly states they need to be used. They may very well be devastating for purchase and maintain traders who’ve constructed up giant positions and are at the moment sitting on a big loss they assumed can be made good in the event that they have been affected person and held till the underlying index began gaining once more.
If solely certified traders are allowed to commerce these leveraged ETFs, they may be lots much less energetic to the purpose that they may be closed by the suppliers as not worthwhile sufficient to be value retaining.
Backside Line: TQQQ Is Solely Appropriate For Day Merchants Who Use It As It Is Designed To Be Used
Day merchants are playing, however they know they’re playing. In the event that they lose their cash, it is their very own rattling fault. They might have misplaced simply as a lot enjoying the slots.
However the purchase and maintain traders who’ve been seduced into believing that TQQQ is an affordable funding for anybody who believes that the market at all times developments up over the long-term can be properly suggested to offer TQQQ a move. In case you are already invested and are sitting on an enormous loss, maintain your eye on FINRA’s actions. In the event that they shut the ETF down, you could have to behave quick. You possibly can learn an fascinating article from Charles Schwab about what occurred when another leveraged ETFs have been shut down after tanking in April of 2020 right here.
Until you’re an funding skilled who can clarify to me in quite simple phrases precisely how the funding banks providing the swaps TQQQ makes use of worth these swaps and extra importantly what the revenue motivation is that makes them wish to enter that commerce, you would be properly suggested to keep away from TQQQ besides, maybe as a option to deploy a really small quantity of play cash you actually can afford to see disappear right into a puff of smoke.
The problem just isn’t that TQQQ is dangerous. The problem is that too most of the dangers related to TQQQ are not possible to evaluate. The unknown habits of 3x leveraged ETFs on account of how leverage decay will have an effect on them in a protracted flat market or a market just like the one which adopted the dot.com bust is one set of unknowns. The influence of upper charges on prices, the opacity of TQQQ’s methodology, and the specter of FINRA rules are others. However largely it’s the incapability of common traders to know the dynamics of the derivatives that drive TQQQ’s extra income which are most worrying.
Even when these dangers did not exist, there’s the plain concern that traders don’t have any motive to anticipate QQQ to expertise the form of dramatic worth appreciation it displayed in the course of the COVID-19 lock downs. With out momentum, TQQQ just isn’t a gorgeous funding. The excessive expense ratio and the excessive inside buying and selling prices, which can improve with larger rates of interest or flat markets, all work in opposition to the probability that purchase and maintain traders will duplicate the windfall income that have been out there for the one extremely anomalous yr when traders trapped at residence by COVID spent their spare time playing on tech shares.