TQQQ and SSO Aim for Above-Average Returns, But There's a Clear Winner for Investors

The ProShares UltraPro QQQ ETF (NASDAQ:TQQQ) differs from the ProShares Ultra S&P 500 ETF (NYSEMKT:SSO) by offering higher leverage, greater tech exposure, and notably higher volatility.

Both funds pursue leveraged daily returns, with SSO aiming for 2x the S&P 500 and TQQQ targeting 3x the Nasdaq-100. This matchup spotlights two aggressive ETFs for short-term traders or tactical investors seeking amplified index exposure, but their risk profiles and sector tilts diverge sharply.

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 offers advantages for both fee-conscious and income-driven investors, with a lower expense ratio and higher yield. However, both of these factors primarily impact long-term investors, and these particular leveraged ETFs are best suited as short-term investments.

Performance & risk comparison

TQQQ’s 3x leverage has driven stronger one-year gains, but its five-year max drawdown is nearly double SSO’s, highlighting much greater downside risk. Over the past five years, both ETFs roughly doubled an initial $1,000, but SSO did so with less severe declines.

What's inside

TQQQ seeks to deliver 3x the daily returns of the Nasdaq-100, making it highly concentrated in technology (55% of the fund's total assets), with additional weight in communication services (17%) and consumer cyclicals (13%).

The fund holds 101 stocks, with its largest stakes in Nvidia, Microsoft, and Apple. Its daily leverage reset and tech-heavy focus mean sharp swings and the potential for rapid losses if tech underperforms.

SSO, by contrast, offers 2x daily exposure to the S&P 500, spreading risk across a broader universe of 503 holdings. Its top holdings mirror those of TQQQ, but SSO’s sector mix is more diversified with technology making up 35% of the fund, financials at 13%, and consumer cyclical at 11%. Both funds use a daily leverage reset, which can erode returns if held long-term and volatility spikes.

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What this means for investors

SSO and TQQQ are both high-risk, high-reward ETFs. They're designed to earn above-average returns, but SOO has been the stronger performer.

TQQQ is the higher risk of the two funds, with its 3x daily leverage and heavy tilt toward the technology industry. This ETF has the potential to substantially outperform SSO, but in recent years, that risk hasn't paid off. TQQQ's one- and five-year total returns are nearly identical to SSO's, despite this ETF experiencing much more severe volatility -- with a higher beta and a max drawdown nearly double that of SSO.

Now, this doesn't mean SSO is not a risky investment. All leveraged ETFs will carry greater risk, especially if held long-term. But SSO tracks the S&P 500 and only aims for 2x the daily returns of the index, which results in greater diversification and milder price fluctuations.

If you're considering investing in either of these ETFs, be prepared for substantial ups and downs. But between the two funds, TQQQ has struggled with volatility over the last few years with little payoff.

Glossary

Expense ratio: The annual fee, as a percentage of assets, that a fund charges to cover operating costs.
Leverage: The use of borrowed money or derivatives to amplify investment returns, increasing both potential gains and losses.
ETF (Exchange-Traded Fund): A fund traded on stock exchanges that holds a basket of assets, like stocks or bonds.
Drawdown: The percentage decline from a fund’s peak value to its lowest point over a specific period.
Beta: A measure of an investment’s volatility compared to the overall market, typically the S&P 500.
Dividend yield: Annual dividends paid by a fund or stock, expressed as a percentage of its current price.
AUM (Assets Under Management): The total market value of assets that a fund manages on behalf of investors.
Sector: A group of companies or assets operating in the same segment of the economy, such as technology or financials.
Daily leverage reset: The process by which leveraged ETFs adjust their exposure each day to maintain a set leverage ratio.
Nasdaq-100: An index of 100 of the largest non-financial companies listed on the Nasdaq stock exchange.
S&P 500: An index tracking the 500 largest publicly traded companies in the United States.
Consumer cyclicals: Companies whose performance tends to follow economic cycles, like retailers, automakers, and travel firms.

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.