Daily leverage resets in SPXL can erode returns even when the S&P 500 rises, due to volatility drag and compounding effects.
The Direxion Daily S&P 500 Bull 3X Shares (SPXL) aims to deliver three times the daily performance of the S&P 500 but can lose money over time despite the index rising. Its 0.84% expense ratio and daily leverage resets create volatility drag, distorting long-term returns.
SPXL has returned 155% cumulatively over five years but performs best in sustained bull markets with low daily volatility. In choppy or sideways markets, compounding effects can lead to losses even when the S&P 500 finishes higher. The S&P 500 is up about 10% in 2026, attracting investors seeking amplified returns.
Investors are advised to use SPXL for short-term tactical trading rather than long-term holdings. Alternatives like SPY, with a lower expense ratio, may better suit those seeking prolonged S&P 500 exposure.