Global financial markets have been rattled by sudden tariff hikes, leading to widespread panic-selling by investors. In just two trading days—Thursday and Friday—leveraged exchange-traded funds (ETFs) suffered a massive blow, wiping out more than $25 billion in value.
These ETFs, which are designed to multiply the daily movements of stocks or indices (sometimes by as much as 5x), have become popular with retail investors looking for fast gains. However, their high-risk nature also means heavy losses when markets swing sharply.
According to FactSet, the latest crash—triggered by former U.S. President Donald Trump’s announcement of “reciprocal tariffs”—caused these funds to lose nearly 25% of their value in just two days. This collapse is now the biggest in history for leveraged ETFs.
To put it in perspective:
During the COVID market crash in March 2020, these funds lost $9.1 billion and $5.6 billion on consecutive days.
Back in 2018, during the “Volmageddon” volatility spike, similar ETFs also saw massive losses.
This recent downturn highlights the extreme risk tied to leveraged ETFs, especially during times of economic shocks and policy uncertainty.
Be First to Comment