3x leveraged and inverse ETFs come to Canada: Here’s how to decide if they’re right for you

Many ETF investors would be thrilled if the benchmark their fund tracked climbed by 2% in a day. But what if that fund could jump by up to 6% on that 2% gain instead? Savvy investors who can stomach more than an average amount of risk may be in luck: with 3x leveraged and inverse ETFs, you can supersize returns (though you can also supersize declines) in a single day of trading.

Leveraged, inverse and inverse-leveraged ETFs that can amplify your gains have been around for years, but it’s only been since May 2025 that Canadian 3x leveraged funds have been available in Canada. Until now, investors seeking to capitalize on market volatility have been limited to a maximum of 2x leverage in Canadian products, or they have had to look to U.S. markets for higher-leverage funds, which could introduce additional currency and investor protection risks.

How do these funds work, and why would you want to own one? We explain.

Investors looking for leveraged U.S. exposure who want to buy Canadian can now choose from several leveraged and inverse-leveraged ETFs that offer 3x exposure to the S&P 500® or Nasdaq-100® indices. These 3x ETFs aim to provide investors with 300% of the daily performance of that index (or 300% of the opposite daily performance).

Say you have $100 and the S&P 500® increases by 0.2%, which is a gain you might expect on a typical trading day. Theoretically, a regular S&P 500® ETF would now be worth $100.22, while your 3x fund could see a gain up to $100.66. On a $10,000 investment, that could result in a $44 difference between the leveraged and unleveraged returns in a single day. Depending on how the market performs over the next few days, you could significantly amplify those gains.

Leveraged ETFs can be powerful tools for capturing short-term market moves, but they’re not without risks. Because they reset daily, their performance can drift over time,  especially in choppy or volatile markets. That means while you might see amplified gains on up days, losses can stack up just as quickly when markets turn. Some experts recommend caution, so if you’re considering these ETFs, make sure to do your homework, know your risk tolerance, and talk to an advisor if you’re unsure how they fit into your strategy.

Check out the chart below to see what nine days of holding the BetaPro 3x S&P 500 Daily Leveraged Bull Alternative ETF (“TSPX”) could look like. One thing to keep in mind is that most leveraged and inverse leveraged ETFs, including BetaPro ETFs, reset daily, meaning each new trading day is a fresh start in terms of performance.  

As you can see in the example, you could potentially post a 5.1% return over the 10 days relative to the starting point versus a 1.7% return for the index – a $340 difference based on our earlier $10,000 example. If you held the 2x leveraged ETF tracking the same benchmark, you’d get a return of 3.4%. Of course, this is just a theoretical example – it’s important to keep in mind that there could be more days of underperformance, which could result in a greater decline in your initial investment as well.

If you think the S&P 500® could fall, the BetaPro -3x S&P 500 Daily Leveraged Bear Alternative ETF (“SSPX”) corresponds to 300% of the opposite of the daily performance of the S&P 500® Index.  Taking a more extreme example, if the market dropped by 10% every day, which would cause the S&P 500® to lose a collective 61.3%, your 3x inverse ETF would be up by 416%. Of course, real markets rarely move like that, and results can vary significantly—especially if the trend reverses.

Keep in mind, though, that leverage magnifies your losses, too. (And remember these ETFs are supposed to return 3x the daily movement of an index, not 3x the long-term return.)

If the index goes down for a couple of days in a row, you’ll experience much greater losses than if you held a basic S&P 500® ETF itself. Even if the index is flat over, say, four days, you could still lose money. It’s called time decay. Consider this chart:

Even if the index ends up with a net return of zero after those four days, a leveraged ETF tracking it could still record a loss, as the leveraged ETF is reset daily. (That means the leverage is applied to the value of the ETF at the end of each trading day – not the original amount invested. For example, if your $100 investment went up to $103 on day one, the next day’s leverage is based on $103.  If it then drops to $101, leverage is applied to that new amount, and so on. Over time, these daily resets can create a compounding effect that causes the ETF’s performance to deviate from the index, especially in volatile, up-and-down markets.

Leveraged and inverse leveraged ETFs are intended for daily, short-term tactical trades by sophisticated investors who can tolerate a higher level of risk and have the ability to closely monitor their investments. These securities – and ones listed on a Canadian exchange specifically – can be advantageous in a number of ways:

As the first crop of 3x and -3x leveraged ETFs comes to the Canadian market, now’s the time to consider whether you want to increase your leverage to some key indexes. Think about how you’re using the 2x bull and bear funds and whether you want to use more leverage to capitalize on market movements.

DISCLAIMERS

Commissions, management fees and expenses all may be associated with an investment in products (the “Global X Funds”) managed by Global X Investments Canada Inc. The Global X Funds are not guaranteed, their value changes frequently and past performance may not be repeated. Certain Global Funds may have exposure to leveraged investment techniques that magnify gains and losses which may result in greater volatility in value and could be subject to aggressive investment risk and price volatility risk. Such risks are described in the prospectus. The prospectus contains important detailed information about the ETF. Please read the relevant prospectus before investing.

The Global X Funds include our BetaPro products (the “BetaPro Products”). The BetaPro Products are alternative mutual funds within the meaning of National Instrument 81-102 Investment Funds and are permitted to use strategies generally prohibited by conventional mutual funds: the ability to invest more than 10% of their net asset value in securities of a single issuer, to employ leverage, and engage in short selling to a greater extent than is permitted in conventional mutual funds. While these strategies will only be used in accordance with the investment objectives and strategies of the BetaPro Products, during certain market conditions they may accelerate the risk that an investment in shares of a BetaPro Product decreases in value.

The BetaPro Products consist of our Daily Bull and Daily Bear ETFs (“Leveraged and Inverse Leveraged ETFs”), Inverse ETFs (“Inverse ETFs”), and our BetaPro S&P 500 VIX Short-Term Futures™ ETF (the “VIX ETF”). The Leveraged and Inverse Leveraged ETFs and certain other BetaPro Products use leveraged investment techniques that can magnify gains and losses and may result in greater volatility of returns. These BetaPro Products are subject to leverage risk and may be subject to aggressive investment risk and price volatility risk, among other risks, which are described in their respective prospectuses. Each Leveraged and Inverse Leveraged ETF seeks a return, before fees and expenses, that is either up to or equal to either 200% or –200% of the performance of a specified underlying index, commodity futures index, or benchmark (the “Target”) for a single day. Each Inverse ETF seeks a return that is –100% of the performance of its Target. Due to the compounding of daily returns a Leveraged and Inverse Leveraged ETF’s or Inverse ETF’s returns over periods other than one day will likely differ in amount and, particularly in the case of the Leveraged and Inverse Leveraged ETFs, possibly direction from the performance of their respective Target(s) for the same period. For certain Leveraged and Inverse Leveraged ETFs that seek up to 200% or up to -200% leveraged exposure, the Manager anticipates, under normal market conditions, managing the leverage ratio as close to two times (200%) as practicable however, the Manager may, at its sole discretion, change the leverage ratio based on its assessment of the current market conditions and negotiations with the respective ETF’s counterparties at that time. Hedging costs charged to BetaPro Products reduce the value of the forward price payable to that ETF.

The BetaPro Products include the 3x and -3x ETFs and will use leveraged investment techniques that can magnify gains and losses and may result in greater volatility of returns. These 3x and -3x ETFs are subject to leverage risk and may be subject to aggressive investment risk and price volatility risk, among other risks, which are described in their prospectus. Each 3x and -3x ETF seeks a return, before fees and expenses, that is equal to either 300% or –300% of the performance of a specified underlying index (the “Target”) for a single day. Due to the compounding of daily returns, a 3x and -3x ETF’s returns over periods other than one day will likely differ in amount and possibly direction from the performance of their respective Target(s) for the same period. Hedging costs charged to BetaPro Products reduce the value of the forward price payable to that ETF.  

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Published June 25, 2025