Few funds in history can rival the returns of ProShares UltraPro QQQ, a $7 billion exchange-traded fund that seeks to triple the daily performance of the Nasdaq 100 index.
Yet fewer can rival its risk, and you can lose money on it even in a flat or rising market. You should think three times before investing in such a fund.
Commonly called by its ticker symbol, TQQQ, the fund returned an average of 51.5% annually over the 10 years ended July 31, making it the single best-performing mutual fund or ETF of the past decade, according to Morningstar Inc. Over the 10 years through Aug. 13, the fund has earned a cumulative gain of 7,298%.
TQQQ fired up the returns of the already smoking-hot Nasdaq 100 index, dominated by such market darlings as Apple Inc., Microsoft Corp. and Amazon.com Inc.
So far this year, the Nasdaq 100 is up “only” 28.7%. The TQQQ fund leveraged, or amplified, that into a 47.6% gain largely by using instruments known as total-return swaps to triple the daily return of the index.