SOXL and SOXS Explained: 3x Leveraged and Inverse Chip ETFs

SOXL and SOXS are exchange-traded funds that magnify the daily moves of US chip stocks, one upward and one in reverse. Direxion runs both, and they have traded on NYSE Arca since March 2010. SOXL is the “Bull 3X” fund and SOXS the “Bear 3X” fund. Both follow an index of the 30 largest US-listed chip stocks, close to but not the same as the SOX on our SOX map, and both are built for one trading day at a time.

What do SOXL and SOXS aim to do?

Their prospectus states the targets this way:

Fund	Full name	Daily target
SOXL	Direxion Daily Semiconductor Bull 3X ETF	“300% of the daily performance of the Index”
SOXS	Direxion Daily Semiconductor Bear 3X ETF	“300% of the inverse (or opposite) of the daily performance of the Index”

The “Index” is the NYSE Semiconductor Index. If it rises 1% in a day, SOXL aims to rise about 3% and SOXS to fall about 3%, before fees. Both funds say they do “not seek to achieve” that multiple “for a period of time different than a trading day.” SOXL’s total expenses are 0.91% a year, cut to 0.75% by a fee waiver through September 1, 2027; SOXS’s are 1.00%.

Which index do they follow?

The NYSE Semiconductor Index, which iShares describes as tracking “the thirty largest U.S.-listed semiconductor companies.” It includes US-listed shares of foreign companies such as TSMC and ASML, caps every stock at 8% and those outside the five largest at 4%, and holds all such foreign listings together to 10%. The iShares Semiconductor ETF (SOXX) tracks the same index, so SOXX’s daily move is a close stand-in for the index the two funds multiply.

It is not the same as the better-known SOX, the PHLX Semiconductor Sector Index, which Nasdaq calculates with caps of 12%, 10% and 8% for its three largest stocks. The two Direxion funds followed the SOX until August 25, 2021, when they switched to the NYSE index. The Philadelphia Semiconductor Index (SOX) explains the SOX, and SOXX vs SMH vs SOXQ compares the unleveraged chip funds.

How do they get three times the exposure?

Mostly with swaps, contracts with banks that pay the index’s return. On April 30, 2026, SOXL’s exposure was 243.3% in total return swaps and 56.7% in the index stocks themselves, adding up to 300%. SOXS held no stocks at all: its exposure was minus 300% in swaps, backed by money market funds. The swap counterparties listed in the funds’ report included BNP Paribas, Goldman Sachs, Bank of America, Societe Generale, J.P. Morgan, UBS, Citibank and Barclays. Each fund rebalances “at the close of the markets each trading day.”

On July 31, 2026, SOXL had net assets of about $19.4 billion and SOXS about $1.6 billion, according to the funds’ monthly filings with the SEC.

Why don’t they deliver 3x over longer periods?

Because the 3x is reset every day, and gains and losses compound. The prospectus puts it plainly: “For periods longer than a single day, the Fund will lose money if the Index’s performance is flat, and it is possible that the Fund will lose money even if the Index’s performance increases over a period longer than a single day.” For SOXS the same warning applies if the index decreases.

A simple case: if the index rises 10% one day and falls 9.09% the next, it is back where it started. A 3x fund rises 30% and then falls 27.27%, ending about 5.5% lower. The bigger the daily swings, the larger that gap.

The prospectus includes a table of what each fund would return over a year with no fees, depending on the index’s return and how much it swings (volatility):

Index over one year	Index volatility	SOXL would return	SOXS would return
0% (flat)	25%	−17.1%	−31.3%
0% (flat)	50%	−52.8%	−77.7%
+10%	25%	+10.3%	−48.4%
−10%	25%	−39.6%	−5.7%

From April 2021 to December 2025, the index’s annualized volatility was 36.03%, according to the same document.

What happened in real markets?

Using regular-session closing prices, with SOXX standing in for the index:

Period	SOXX (the index)	3 × SOXX	SOXL	SOXS
One day: median gap, last 250 sessions	—	—	within 0.13 points of 3x	within 0.20 points of −3x
May 11 – Aug 6, 2026 (60 sessions)	0.00%	0.00%	−30.5%	−44.8%
Oct 2 – Oct 30, 2026 (20 sessions)	−19.9%	−59.8%	−52.9%	+75.3%
Dec 31, 2025 – Oct 30, 2026	+56.8%	+170.5%	+83.4%	−91.4%

Over a single day, both funds came close to their targets. Over the 60 sessions to August 6, the index went nowhere and both funds lost money. Over 2026 so far, the index rose 56.8% but SOXL rose 83.4%, about half of three times the index. For calendar 2025, the prospectus reports the index up 41.22%, SOXL up 55.05% and SOXS down 85.48%.

The funds also warn that a single bad day can wipe them out: SOXL holders “could lose the full principal value” if the index falls more than 33% in a day, and SOXS holders if it rises more than 33%.

Why does SOXS’s share price keep resetting?

Because a fund that loses value over time ends up with a very low share price, and Direxion periodically combines shares. SOXS has had ten reverse splits since 2011, most recently 1-for-20 in March 2026 and 1-for-10 in July 2026, according to Direxion’s prospectus supplements. SOXL has split the other way, 4-for-1 in 2015 and 15-for-1 in 2021. Charts of either fund adjust older prices for these splits.

What do Japanese brokers and regulators say?

SBI Securities, Rakuten Securities and Mitsubishi UFJ eSmart Securities list both funds among the US ETFs they offer. Japan’s Financial Services Agency says leveraged and inverse ETFs “are products mainly intended for profiting from short-term trading” (our translation), and since January 2022 brokers must state when such a product does not suit medium- or long-term investment goals.

How do they connect to Asian chip stocks?

The index the two funds follow includes US-listed shares of TSMC, ASML and other foreign chipmakers, and its moves come from the US session, which ends before markets open in Tokyo, Seoul and Taipei. For how US chip stocks reach Asian trading hours, see US Stock Futures Overnight, and for the day’s US chip stocks, see the SOX map and its explainer.