UPRO vs SPXL - Same S&P 500 3x, So What Differs? Expense Ratio, Liquidity, and Tracking Precision Compared

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Basic Specs - Two S&P 500 3x ETFs

UPRO (ProShares UltraPro S&P500) and SPXL (Direxion Daily S&P 500 Bull 3X) both target 3x the daily S&P 500 return. Theoretically identical returns, but subtle differences exist in practice.

UPRO: ProShares, launched June 25, 2009. Expense ratio 0.91%, AUM ~$35 billion. SPXL: Direxion, launched November 5, 2008. Expense ratio 0.97%, AUM ~$40 billion.

The 0.06% expense ratio difference is small but compounds over time. Over 10 years on $10,000, this gap produces roughly $60-80 difference. Not decisive, but UPRO has the edge if all else is equal.

SPXL launched 7 months earlier, during the Lehman crisis. UPRO launched after the recovery began, so its since-inception return looks better. But this is a timing artifact, not a quality difference.

Tracking Precision - Daily Deviation Statistics

The most important quality metric for leveraged ETFs is tracking error: deviation from the target daily return (S&P 500 × 3). Over 2020-2024, UPRO's daily tracking error (standard deviation) is ~0.02-0.03%, SPXL's is ~0.03-0.04%. UPRO is slightly more precise.

Daily deviations are tiny but accumulate annually. Combined with the expense ratio difference, UPRO tends to outperform by 0.1-0.3% annually. However, during extreme volatility (VIX 40+), both ETFs experienced 1-2% daily deviations in March 2020.

The difference is not statistically decisive. Market conditions cause variation, and in some years SPXL slightly outperforms. Neither has a clear structural advantage in tracking.

For most investors, this tracking difference is irrelevant compared to the much larger impact of entry timing, allocation size, and rebalancing discipline.

Liquidity Comparison - Volume and Spreads

SPXL averages ~8 million shares daily; UPRO ~6 million. Both are adequate for retail investors. Bid-ask spreads are typically 0.01-0.02% for both during normal hours.

For options strategies, UPRO has slightly higher options volume, making covered calls and protective puts easier to execute with tighter spreads.

For large orders ($1M+), SPXL's higher equity volume may produce less market impact. But for typical retail sizes, the difference is negligible.

Both ETFs have similar AUM (~$35-40B), so market makers provide comparable liquidity support. Neither has a meaningful liquidity advantage for normal trading.

Tax Efficiency and Distributions

Both pay annual distributions, varying by year. In 2023, UPRO's yield was ~0.5%, SPXL's ~0.3%. Distribution sources include swap interest income and realized capital gains from rebalancing.

In high-rate environments (2022-2024), swap interest income increases, raising distributions. For Japanese investors, U.S. ETF distributions face 10% U.S. withholding plus ~20% Japanese tax (foreign tax credit applicable).

Lower distributions mean higher tax efficiency, giving SPXL a slight edge here. However, leveraged ETF returns are primarily capital gains, making distribution differences minimal in the total return picture.

Tax planning around sale timing (loss harvesting, NISA utilization) matters far more than distribution differences between these two ETFs.

Long-Term Performance Difference

Over 2010-2024, UPRO outperforms SPXL by approximately 0.1-0.3% annually. Over 15 years, this cumulates to roughly 2-5%. On $10,000, the final difference is a few hundred dollars. Not decisive.

The gap comes from expense ratio (0.06%) and tracking precision differences. In specific years, SPXL outperforms (e.g., 2020 COVID recovery). The difference fluctuates with market conditions.

Statistically, the performance difference is not significant. Neither is clearly superior. The choice should be based on practical factors rather than historical return differences.

Both deliver essentially the same exposure. Obsessing over which is 0.1% better misses the forest for the trees.

Which to Choose - Practical Conclusion

Prioritize expense ratio: UPRO (0.91% vs 0.97%). Prioritize equity volume: SPXL (8M vs 6M shares/day). Prioritize options: UPRO (higher options volume).

Check availability at your brokerage. Major Japanese online brokerages (SBI, Rakuten, Monex) offer both, but availability can change.

For long-term holding, UPRO's lower expense ratio gives a slight edge. For frequent traders, SPXL's higher volume may reduce slippage.

Most importantly, the UPRO vs SPXL choice matters far less than your overall strategy: how to incorporate S&P 500 3x leverage into your portfolio. ETF investing guides on portfolio construction theory are more valuable than agonizing over which 3x ETF to pick.