TQQQ vs. QLD: Which High-Risk, High-Reward Leveraged ETF Is the Better Buy for Investors?

Both the ProShares Ultra QQQ ETF (NYSEMKT:QLD) and the ProShares UltraPro QQQ (NASDAQ:TQQQ) are designed for investors seeking amplified exposure to the Nasdaq-100 Index using daily leverage resets.

While QLD aims for two times the daily return, TQQQ pushes this further to three times, which impacts both potential gains and losses. This comparison focuses on cost, risk, and performance to help clarify which approach may appeal more, depending on risk tolerance and investment horizon.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500. The 1-yr return represents total return over the trailing 12 months.

TQQQ is slightly more affordable on fees and provides a substantially higher yield, which may appeal to those seeking income alongside leverage. That said, because both of these ETFs function best as short-term investments, fees and yield may not be the most important factors to consider.

Performance & risk comparison

What's inside

TQQQ holds 101 positions and seeks to deliver three times the daily performance of the Nasdaq-100 Index, with a focus on technology (55% of total assets), communication services (17%), and consumer cyclical (13%) sectors. Its top holdings include Nvidia, Apple, and Microsoft.

TQQQ’s daily leverage reset means returns can diverge significantly from the underlying index if held long-term, especially in volatile markets.

QLD, by contrast, offers two times daily leverage on the same index, with very similar sector weights and top holdings. Both funds reset leverage daily, which can amplify both gains and losses over short periods. However, TQQQ’s higher leverage means that risk and reward are further magnified.

Investors should be aware that neither fund is intended for long-term buy-and-hold strategies due to compounding effects and the risk of large drawdowns.

For more guidance on ETF investing, check out the full guide at this link.

What this means for investors

QLD and TQQQ track the Nasdaq-100, so their portfolios are very similar. Both are heavily focused on the tech industry, and they offer the same top holdings and sector allocations.

The primary difference between them is their leverage factor. QLD aims to earn two times the daily return of the underlying index, while TQQQ targets three times daily returns.

TQQQ's higher earnings target means it can be the more lucrative investment of the two, but it's also prone to deeper drawdowns and more significant volatility -- as seen with its substantially higher beta and max drawdown over the last five years.

In theory, TQQQ's higher risk should result in higher returns. In recent years, though, that risk hasn't always paid off. Its 12-month returns are only marginally higher than QLD's, and it's actually underperformed QLD over the last five years.

Keep in mind, though, that both of these funds are designed to be short-term investments -- held only a few days at the most. If you buy and sell at the right time, TQQQ's higher leverage factor could result in considerably higher earnings. But with its higher risk level, there's also a greater chance of locking in more significant losses if held long term or if the underlying index underperforms.

Glossary

Leverage: Using borrowed funds or financial instruments to amplify potential returns (and losses) of an investment.
Daily leverage reset: The process of adjusting a fund's leverage exposure back to its target level at the end of each trading day.
Drawdown: The percentage decline from a fund's peak value to its lowest point over a specific period.
Assets under management (AUM): The total market value of assets that a fund or investment company manages on behalf of clients.
Expense ratio: The annual fee, as a percentage of assets, that a fund charges to cover operating costs.
Beta: A measure of an investment's volatility compared to the overall market, often the S&P 500.
Dividend yield: The annual dividend income expressed as a percentage of the investment's current price.
Nasdaq-100 Index: A stock market index comprising 100 of the largest non-financial companies listed on the Nasdaq exchange.
Max drawdown: The largest observed loss from a fund's peak to its lowest point over a specified time frame.
Compounding effects: The impact of gains or losses building on previous returns, which can significantly affect leveraged fund performance over time.
Sector weights: The proportion of a fund's assets allocated to different industry sectors.
Total return: The investment's price change plus all dividends and distributions, assuming those payouts are reinvested.

Katie Brockman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.