However, after the most recent down turn, QLD has come out slightly on top while TQQQ has underperformed QQQ. It's worth noting that since the recovery, both QLD and TQQQ leverage have generally outperformed QQQ most of the time. QLD recovered only half a month after QQQ did, so an investor willing to wait it out with QQQ wouldn't have had to wait much longer if they held QLD instead.

What's noteworthy here is that the markets recovered fairly quickly by most bear market standards. The Covid Crash was largely unexpected by most investors.

While we have not yet recovered from this crash, note that 3x leverage would have put a portfolio down 40%. This has hit growth stocks, a large component of the Nasdaq, quite hard. With inflation running rampant and the economy recovering incredibly well from the pandemic, the Federal Reserve has planned for several rate hikes in 2022, with the first meeting coming in March. By looking at the maximum drawdowns and time to recovery, you as the investor can decide what level of risk you'd like to take and how strongly you believe you can hold your investments through. Let's go through some recent bear markets or downturns to see how all three of these ETFs performed. Of course, the investor psychology logic also follows for the baseline Nasdaq-100 ETF. Investors shouldn't worry much about the liquidity however, as due to TQQQ's higher volatility, QLD typically has a lower premium/discount spread. TQQQ has a 3x the AUM and also more than 15x the volume. QLD has an AUM of about $5B and average volume of 6M. This ETF is offered by the same company that manages TQQQ and has the same expense ratios at 0.95%, though it's significantly less popular. This is where the 2x leverage Nasdaq-100 ETF, ProShares Ultra QQQ ETF ( NYSEARCA: QLD) comes in. It may not result in as much gains, but if the reduced downside causes investors to hold on for longer, then the average leveraged investor may actually make more money with 2x leverage than 3x leverage. Instead, investors may be able to stomach such losses better with a lower leveraged ETF for the Nasdaq. You often have to hold on to your leveraged holdings for many years to recover, something people often cannot do if they see 50-80%+ losses. Yes, in the long run your portfolio will likely recover but investor psychology plays a huge part. With 3x leverage, the volatility and risk in bear markets may be too much to stomach for most investors. I dive into some of the major risks with investing in TQQQ and it's performance in bear markets in a previous article. Of course, this a somewhat biased sample as the period from 2011 (TQQQ inception) to today has been marked with an unrelenting upwards trend. While the Nasdaq-100 ( QQQ ) has performed excellently itself, it has been trounced by TQQQ handily. However, the alluring outperformance of the 3x Nasdaq ETF ( TQQQ) in the recent extended bull market for over a decade has gotten investors excited. Holding leveraged ETFs for long periods is often discouraged due to volatility decay.

Nasdaq max drawdown