3 High-Risk ETFs Aggressive Retail Investors Can't Stop Buying

As market volatility grew and the Nasdaq 100 approached bear-market status, an intriguing pattern emerged: investors bet bigger on risk.

Outstanding shares in the top 50 leveraged ETFs have risen 20% since April 2, according to Citi Global Markets, cited by Bloomberg.

The day marked President Donald Trump‘s so-called “Liberation Day” declaration, which sparked tariff tensions. Even with the uncertainty, retail traders seem unfazed, piling into the high-adrenaline universe of leveraged exchange-traded funds (ETFs) in a daring attempt to reap outsized returns.

High Risk, Higher Conviction

Leveraged ETFs, which derive their returns through derivatives to double, triple, or quadruple an underlying index or asset daily, are experiencing an explosion of popularity. While warning of wipeouts should the market move against the trades, aggressive investors have been attracted to them as the ultimate dip-buying tools.

Nowhere is that sense of optimism stronger than in the following three ETFs that have become default vehicles for the aggressive:

ProShares UltraPro QQQ (NASDAQ:TQQQ)

• Leverage: 3x Long Nasdaq-100
• The poster child of leveraged dip-buying, TQQQ has attracted around $7.1 billion in net inflows since mid-February, $3.1 billion of which came in following the tariff announcements in early April. Aimed to triple the daily return of the tech-heavy Nasdaq 100, TQQQ dropped more than 50% earlier this year but has since recovered almost 30% from its April 9 low.
• Despite a 45% decline from its February high, the rampant buying indicates increased risk appetite as investors hope for another tech-led recovery.

Direxion Daily Semiconductor Bull 3x Shares (NYSE:SOXL)

• Leverage: 3x Long Semiconductor Index
• While the semiconductor industry rides another bumpy cycle, investors are piling into SOXL in hopes that AI demand and supply chain normalization will reignite chip stocks. The ETF brought in $1.8 billion last week alone, per Bloomberg.
• SOXL is designed to provide three times the daily performance of the PHLX Semiconductor Index. Although this leverage amplifies losses as well as gains, it has not dissuaded investors looking for the next big move higher in Nvidia (NASDAQ:NVDA), AMD (NASDAQ:AMD), and other semiconductor players.

ProShares UltraPro S&P 500 (NYSE:UPRO)

• Leverage: 3x Long S&P 500
• While the Nasdaq gets all the headlines, UPRO provides three times exposure to the broad S&P 500—a good bet for those playing a broad-based rebound. The ETF took in $633 million last week, Bloomberg reported.
• Even as the wider S&P slid under the weight of tariffs, investors just kept coming in, indicating that most view the drawdown as a buying opportunity, not as a reason to run.

Also Read: EXCLUSIVE: Why Defiance Is Letting You Go 2X Long On Quantum, And 2X Short On AI, Straight From The CEO

Volatility As A Feature, Not A Bug

Despite warnings from figures like hedge fund titan Bill Ackman, who recently decried leveraged funds for “driving dramatic market moves,” their popularity remains undiminished. Citi analysts note that while retail volumes broadly dipped, leveraged ETFs were an exception, with six making the top 25 most-traded list on Interactive Brokers.

Demand for leveraged ETFs reflects a change in retail investing psychology: volatility is not something to hedge but profit from.

The increased leveraged ETF inflows during a market retreat say it all. Retail traders, some who got their start during the meme stock boom and the 2022 bear market, are growing more comfortable with high-conviction, high-risk bets.

Though the ride is frightening; TQQQ declined 80% in the previous bear cycle before its record-breaking rally; the reward potential brings traders back for more.

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