Best-Performing Leveraged ETFs of Q1 2026

The year 2026 began with strong optimism as the S&P 500 hit the level of 6,976, only to slide to 6,528 three months later. The index even hit a low of 6,316 at some point in March. The sentiment has shifted sharply due to the Iran war. However, hopes of diplomacy offered some support to close out Q1.

Major indices ended the first quarter in the red. The Dow Jones Industrial Average fell 4.2%, the Nasdaq Composite dropped 7.1% and the S&P 500 declined 4.8%.

Geopolitical Shock Ruled Q1: The Iran Conflict

The biggest market-moving catalyst last quarter has been the war involving Iran. The United States and Israel launched coordinated strikes on Iran on Feb. 28, 2026, with President Donald Trump saying that the operation was aimed at destroying Iran’s nuclear program and weakening its current regime.

What was initially expected to be a short conflict has turned into a prolonged disruption, particularly hitting crucial global energy supply routes like the Strait of Hormuz. The resulting oil shock has rattled markets, fueled inflation concerns, and stoked fears of stagflation.

United States Brent Oil Fund LP BNO has gained about 39.3% past month (as of March 31, 2026), although the fund fell 3.7% on March 31, 2026, on hopes of de-escalation. Notably, in late-March, there were talks that Donald Trump may end the Iran conflict even if the Strait of Hormuz stays largely closed, The Wall Street Journal reported, per Reuters, as quoted on Yahoo Finance.

Fed Uncertainty: Seesawing U.S. Treasury Yields

At the start of the year, the Federal Reserve paused rate cuts due to resilient consumer spending and a stable labor market. However, renewed inflationary fears amid geopolitical shocks have complicated the outlook. The benchmark U.S. treasury yield started the year at 4.19% while it hit as high as 4.44% on March 27.

There were fears of a hawkish Fed. The two-year U.S. treasury yield hit a high of 3.96% on March 26, although the same kicked off the year at 3.47%. Markets started preparing for a prolonged pause of rate cuts or even the possibility of rate hikes.

However, contrary to the month-long fear, the Fed indicated in late March that U.S. inflation is under control despite the oil price surge. The statement helped the benchmark treasury yield fall from 4.44% to 4.30% in just two days to close out March.

iShares 7-10 Year Treasury Bond ETF IEF has lost about 1.7% over the past month, while it is off 0.7% this year. On the contrary, hopes of a hawkish Fed boosted the U.S. dollar. Invesco DB US Dollar Index Bullish Fund UUP has gained about 2.5% this year and has added 1.7% past month.

U.S. Economic Growth Slows Sharply in Fourth Quarter

The U.S. economy expanded at a much weaker-than-expected pace in Q4 2025, growing at an annual rate of 0.7%. The figure marked a sharp slowdown from 4.4% growth in the third quarter and 3.8% in the second. Economists had expected the revision to show stronger growth instead of a downgrade, per AP, as quoted on Yahoo Finance.

AI Trade Loses Momentum

The once-dominant AI-driven rally has cooled significantly. Rising bond yields pressured high valuations, while profit-taking and downbeat sentiments toward growth sectors like technology reduced its role as a safe haven.

Uncertainty around AI payoffs, combined with concerns about heavy capital spending rising from global competition, has weighed on the “Magnificent Seven” stocks. Roundhill Magnificent Seven ETF MAGS lost 11.3% in Q1 2026, while the fund has backtracked about 6% over the past month.

Leveraged ETF Winners of Q1

Let’s find out the leveraged exchange-traded fund (ETF) winners of the quarter.

Leverage Shares 2X Long PBR Daily ETF PBRG – Up 187.9%

Petroleo Brasileiro PBR is understandably an energy winner. The Brazilian energy behemoth’s shares surged 74% in Q1, booting the leveraged ETF PBRG.

MicroSectors U.S. Big Oil 3X Leveraged ETN NRGU – Up 168.3%

The underlying Solactive MicroSectors U.S. Big Oil Index is an equal-dollar weighted index that provides exposure to the 10 largest U.S. energy and oil companies.

GraniteShares 2x Long VRT Daily ETF VRTL – Up 103.9%

Vertiv Holdings VRT shares gained 42.7% this year. Vertiv is a leading global provider of critical digital infrastructure and services for data centers, communication networks, and commercial and industrial environments.

Leverage Shares 2X Long TER Daily ETF TERG – Up 102.8%

Teradyne Inc TER shares added 42.8% in Q1. Teradyne manufactures and sells automated test equipment and robotics products.

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This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research

Source Zacks-com