One-Fund Portfolio With 22% CAGR Over 50+ Years, And Why You Should Avoid It

J Cooper profile picture
J Cooper


  • A simulated version of UPRO delivers 22.6% CAGR, turning $1 into over $1,000,000 since 1950.
  • The same fund also suffers 17-year downturns with 97% losses.
  • UPRO can be a great part of a diversified portfolio, especially when balanced with uncorrelated assets.


A simulated 3x daily-leveraged S&P 500 fund, with the same fee structure as the ProShares UltraPro S&P 500 (NYSEARCA:UPRO) would have returned 22.6% CAGR since 1950. This would turn a single dollar in 1950 into more than $1,000,000 today.

However, the same simulated fund also endures downswings that last 17 years. The simulated fund would see a $685,000 portfolio dwindle down to only $22,200 - a loss of 97%.

Leveraged equity funds perform very strongly over the long term. However, they also have enormous swings that are far too large for a majority of investors.

Leveraged equity funds can be a part of a long-term portfolio, provided that the risks they present are balanced with other assets. For example, a risk-weighted portfolio (including but not limited to a risk-parity portfolio) may derive substantial additional returns from holding leveraged equity funds.

These funds are extremely risky, and should likely make up a relatively small part of a diversified portfolio. I will invest in leveraged funds after further research into portfolio allocations, but they are wildly inappropriate for investors with lower risk tolerance and shorter investment horizons.

My Objective

I am considering constructing a leveraged portfolio, likely to include at least a leveraged bond fund and a leveraged equity fund. This leveraged portfolio will not be my entire portfolio, but will hold daily leveraged funds long-term.

As part of this goal, I wish to back-test possible leveraged portfolios as far back as possible. Thus, I wish to simulate daily leveraged funds as far back as possible. In this article, I will simulate a leveraged 3x S&P 500 fund based on UPRO.

I have previously written about this portfolio several times. For those who missed my past articles:

This article was written by

J Cooper profile picture
I used to run a Marketplace service called The Growth Operation.  That service has subsequently been moved to Julian Lin, who is highly-skilled in analyzing and evaluating the cannabis investing marketplace.Julian has renamed the service to The Weed Investors, and it promises to continue to be a great resource and community for investors interested in this growing sector.  I am a contributor to Julian's The Weed Investors community.Thank you to each and everyone who previously subscribed to The Growth Operation.  I appreciate all of your support.-J. Cooper

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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