SOXL vs. SSO: How These Leveraged ETFs Compare on Risk, Returns, and Diversification

The ProShares Ultra S&P 500 ETF (NYSEMKT:SSO) and the Direxion Daily Semiconductor Bull 3X Shares ETF (NYSEMKT:SOXL) both offer leveraged exposure, but SSO targets the broad S&P 500 at 2x leverage, while SOXL amplifies the semiconductor sector at 3x leverage -- leading to very different risk and return profiles.

Both funds are designed for traders seeking magnified daily returns, but SSO delivers broad-market exposure, whereas SOXL concentrates risk in technology hardware. Here’s how these two leveraged ETFs stack up for those weighing high-octane sector bets against diversified market leverage.

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.

SOXL offers a slightly lower dividend yield, but it also boasts a lower expense ratio than SSO. While these are both important factors to consider, they may have a greater impact on long-term investors -- while leveraged ETFs tend to perform better as short-term investments.

Performance & risk comparison

What's inside

SOXL is a highly concentrated play on the semiconductor industry, with only 44 holdings -- all of which are from the technology sector. Its top holdings include Broadcom, Nvidia, and Advanced Micro Devices, each at around 5% of total assets. Like SSO, SOXL uses a daily leverage reset, which can cause actual long-term returns to diverge from the expected multiple of the index, especially in volatile markets.

SSO delivers 2x daily exposure to the full S&P 500, spreading risk across 503 holdings and multiple sectors -- though technology, financials, and consumer cyclicals dominate. Its largest weights are in Nvidia, Microsoft, and Apple, each accounting for less than 10% of total assets. SSO’s broader base means less sector concentration risk, but its leverage reset quirk means the same compounding caveat applies.

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

Foolish take

Leveraged ETFs are high-risk, high-reward investments that are primarily used by short-term traders. When their underlying indexes are thriving, they can earn significantly higher-than-average returns. But during periods of volatility, their leverage resets could result in substantial drawdowns.

SOXL's 3x leverage increases its risk and volatility, as seen with its substantially deeper max drawdown compared to SSO. Because SOXL also focuses on just one small segment of the market -- semiconductors -- you're also getting far less diversification than you would with an ETF that tracks the broader market.

SSO, in contrast, tracks the S&P 500, offering greater exposure to stocks across multiple market sectors. While it's still a high-risk leveraged ETF, its 2x daily leverage does help limit some of its volatility compared to SOXL.

Where you choose to invest will depend on your risk tolerance and earnings goals. SOXL has the potential for higher returns with its targeted approach to tech stocks and its 3x leverage, but it's also much more volatile. While SSO may have less earning potential, it's also somewhat more stable and far more diversified.

Glossary

Leveraged ETF: An exchange-traded fund using financial derivatives to amplify daily returns, often by 2x or 3x the index.
Expense ratio: The annual fee, as a percentage of assets, that a fund charges to cover operating costs.
Dividend yield: Annual dividends paid by a fund, expressed as a percentage of its current share price.
Beta: A measure of a fund's volatility compared to the overall market; higher beta means greater price swings.
Max drawdown: The largest percentage drop from a fund's peak value to its lowest point over a specific period.
Daily leverage reset: The process by which leveraged ETFs rebalance exposure each day, affecting long-term returns due to compounding.
Risk-adjusted return: A measure of how much return an investment generates relative to the risk taken.
Sector concentration risk: The risk of losses due to a fund focusing heavily on one industry or sector.
Assets under management (AUM): The total market value of assets that a fund manages on behalf of investors.
Compounding: The process where investment returns generate their own earnings over time, influencing long-term performance.

Katie Brockman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Apple, Microsoft, and Nvidia. The Motley Fool recommends Broadcom and 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.