Weekly and Monthly and Quarterly Leveraged ETFs, Oh My!

In September 2024, weekly, monthly, and quarterly 2.0x calendar-reset leveraged exchange-traded funds (LETFs) were introduced as an alternative to the standard daily reset leveraged funds. This study finds that longer-reset LETFs outperform their daily counterparts over their respective holding periods during periods of normal to high volatility, based on both the S&P 500 and NASDAQ-100. Daily reset LETFs tend to outperform during periods of very high return trend and low volatility. For investors holding bullish LETFs for up to one year, on average, longer-reset LETFs marginally outperform their daily counterparts during periods of above-average volatility. However, there is little difference between differently reset LETFs during periods of low volatility, and by five years, regardless of the volatility, there is little discernible difference between daily to quarterly reset LETFs. The main advantage of calendar-reset LETFs on an underlying index is avoiding leverage decay over the reset period, giving investors more certainty about realized returns for a given underlying index return.