Triple-Leveraged Tech ETF Saw Record Outflows During Stock Rally

During this week’s massive technology rally, a $9.8 billion triple-leveraged ETF tracking the Nasdaq 100 suffered its biggest-ever exodus.

Traders yanked about $476 million from theProShares UltraPro QQQ ETF (TQQQ) in the latest session for which Bloomberg has data, even with the exchange-traded fund heading toward its best week since April. Meanwhile, the $1.5 billionProShares UltraPro Short QQQ ETF (SQQQ) — which seeks results that correspond to three times the inverse performance of the Nasdaq 100 — took in the most cash on record.

Those flows seem counterintuitive given that investors are assessing the reduced odds of a large stimulus package and a resurgence of Covid-19 cases that could lead to tougher restrictions. But after such a big rally in tech, some analysts point to concern about highvaluations and disappointing earnings that could cause some profit taking for the industry that has powered this year’s gains.

“Such a breakneck speed was unsustainable,” said James Pillow, managing director at Moors & Cabot Inc. “It was, after all, the fastest post-election jump ever, so taking some risk off the table was just smart trading.”

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