ETF Comparison Review: SPXS vs SPXU

This review will be comparing and contrasting the benefits and features of SPXS vs SPXU.

SPXS and SPXU are publicly traded leveraged ETFs used for shorting the S&P 500. These ETFs are hugely used for speculating against the market. Furthermore, they can provide substantial returns in a downturn—both ETFs focus on providing a 300% inverse return based on the S&P 500 index’s performance.

In terms of annual returns, both ETFs have performed poorly in the long term. This is because of the current decade’s S&P 500 bull market and decay risk from the investment strategy’s daily rebalancing. However, this ETF can perform better if used for day trades or swing trades.

Figure 1. A Comparison Chart between SPXS vs SPXU was taken from Global Investor. Note, the line chart in blue for SPXS and the line chart in orange for SPXU.

SPXS vs SPXU Product details

Stock Information
Price ($) 36.27 27.39
Shares Outstanding 13,677 23,750
Net Asset Value as of January 23, 2021 ($ ‘000s) 491,138 644,092
1-Month Return -12.18% since 12/22/20 -12.21% since 12/22/20
3-Month Return -30.78% since 12/22/20 -30.66% since 12/22/20
6-Month Return -12.18% since 12/22/20 -12.21% since 12/22/20
Fund Information
Underlying Index S&P 500 S&P 500
Institution Direxion ProShares
Type of Product Inverse Leveraged ETF Inverse Leveraged ETF
Expense Fees 1.07% 0.93%
Has Options Yes Yes

Figure 2. Overview of Product Details taken from the ETF’s respective Prospectus and Fact Sheet.

Underlying Index Strategies Between SPXS vs SPXU

As mentioned, both ETFs’ objective is to provide you with an opportunity to trade against the S&P 500 and magnify your returns by 300%. The process in doing so involves:

  • For SPXS, the principal strategy is to invest at least 80% of its net assets (plus borrowing for investment purposes) in financial instruments, such as swap agreements, securities of the index, and ETFs that track the index. Overall, the strategy invests in the appropriate equities and financial derivatives to garner exposure from the S&P 500 equity market. Financial derivatives used include:
    • Swap agreements with major global financial institutions ranging from a day to more than a year
    • Futures contracts

Note, using options, swaps and financial instruments to amplify returns is a common way to increase leverage.

It’s not specified in the prospectus or fact sheet what the remaining assets are invested in. However, the additional capital is most likely to meet financial obligations if losses occur on the financial derivatives. Additionally, this provides ample liquidity, ensuring other financial positions do not need to be closed.

Rafferty Asset Management rebalances the fund daily to achieve the principal investment strategy.

  • For SPXU, the principal strategy is to invest in financial instruments and money market instruments. The financial derivatives included are:
    • Swap agreements with major global financial institutions ranging from a day to more than a year
    • Futures contracts
  • Money market instruments used are:
    • US treasury bills that have initial maturities of one year or less
    • Repurchase agreements

SPXS and SPXU both have a similar investment objective, but the ETFs’ fundamental difference is SPXU’s investment focus on financial derivatives. This strategy is essentially mathematically driven and cost-efficient, hence giving SPXU lower transaction fees.

ETF Performance

Both ETFs’ performance is consistent with the fund’s objective and is highly correlated to the SPY index. See Figure 3 below for details.

Overall, SPXU outperforms slightly better than SPXS based on annualized returns. SPXS has an annualized return of -46.08% in the table below compared to SPXU’s annualized return of -45.31%. Hence, SPXU performed 0.77% better than SPXS. SPXS’s transaction fees dragging the portfolio’s returns are most likely the cause for this difference in performance.

Name Ticker SPY SPXS SPXU Annualized Return Daily Standard Deviation
SPDR S&P 500 ETF SPY -1.00 -1.00 15.57% 1.08%
Direxion Daily S&P 500 Bear 3x ETF SPXS -1.00 1.00 -46.08% 3.28%
ProShares UltraPro Short S&P500 SPXU -1.00 1.00 -45.31% 3.25%

Figure 3. Asset correlations for time period 06/25/2009 – 01/22/2021 based on daily returns taken from PortfolioVisualizer.

Key ETF Risks

Numerous risks apply to these ETFs. Given the nature of leveraged ETFs, substantial risks are involved in these financial products, including risks that apply to financial derivatives. Key risks to both SPXS and SPXU include:

  1. Market Risk: Market risks include political, regulatory, market and economic developments that impact specific economic sectors, industries or segments of the US market.
  2. Derivatives Risk: Investments in derivatives pose substantial risks compared to equities. These risks include counterparty risk and securities lending risk.
  3. Daily Index Correlation Risk/Tracking Risk: There is no guarantee that the funds will achieve a 100% correlation with the index, especially when the index has extreme volatility, market disruptions, or regulatory restrictions.


Ultimately, traders looking to short the S&P500 can use either SPXS or SPXU, as both ETFs are great for shorting the S&P 500 while providing you with ample leverage. The two ETFs are extremely inverse correlated to the index as per the correlation matrix in Figure 3. However, between the two ETFs, it is slightly more cost-efficient to trade SPXU vs SPXS, as the fund has lower expense ratio fees due to its inherent use of financial derivatives.

Although there are risks associated with using derivatives, it seems ProShares has done an excellent job creating this leveraged ETF, as its historical volatility (measured by standard deviation) is three basis points lower.

Disclaimer: All information and figures taken for this comparison review between SPXS and SPXU are from the Prospectus and Fact Sheet, as well as from other financial resources.

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