SOXL vs. SPXL: These Leveraged ETFs Swing Big for Potentially Lucrative Returns -- but Are They Worth the Risk?

Core Insights - The article compares two leveraged ETFs, Direxion Daily S&P 500 Bull 3X Shares (SPXL) and Direxion Daily Semiconductor Bull 3X Shares (SOXL), highlighting their different risk profiles and performance metrics [1][8]. Cost & Size Comparison - SPXL has an expense ratio of 0.87% and AUM of $6.2 billion, while SOXL has a lower expense ratio of 0.75% and AUM of $13.6 billion [3]. - The one-year return for SPXL is 30.47%, whereas SOXL has a significantly higher return of 50.52% [3]. - SPXL offers a dividend yield of 0.75%, compared to SOXL's yield of 0.53% [3]. Performance & Risk Comparison - Over five years, SPXL has a maximum drawdown of -63.80%, while SOXL has a much steeper drawdown of -90.46% [4]. - An investment of $1,000 in SPXL would grow to $3,158 over five years, while the same investment in SOXL would only grow to $1,390 [4]. Holdings Composition - SOXL is fully invested in the semiconductor sector, with 100% of its assets in technology stocks and 44 holdings, including major companies like Advanced Micro Devices, Broadcom, and Nvidia [5]. - SPXL tracks the S&P 500, diversifying its risk across more than 500 stocks, with significant allocations in technology, financial services, and consumer cyclicals, featuring top holdings like Nvidia, Apple, and Microsoft [6]. Investment Implications - SOXL is characterized by higher volatility and risk, with a beta of 5.32, compared to SPXL's beta of 3.07, indicating more extreme price swings [3][9]. - Investors must weigh the potential for higher returns from SOXL against its increased risk, while SPXL offers more diversification and less volatility [11].