5 Worst Performing ETFs of 2025 So Far

While the S&P 500 is up 16.8% and the Nasdaq-100 22.3% YTD, several leveraged and inverse ETFs that short 2025’s biggest winners have collapsed—Direxion Junior Gold Miners Bear 2x (JDST) -89.2%, Direxion Gold Miners Bear 2x (DUST) -87.0%, Direxion Semiconductor Bear 3x (SOXS) -85.8%, Defiance 2x Long MSTR (MSTX) -82.8% and T‑Rex 2x Long MSTR (MSTU) -82.7%—as gold surged ~60%, gold miners more than doubled and semiconductors rallied on AI demand, while Strategy (MSTR) plunged over 45% amid a crypto setback; the extreme losses highlight how daily resetting, leverage and volatility-driven decay can produce near-total losses in trending markets, signaling the need for disciplined risk management when using these products.

Analysis

U.S. equities have been strong through early December with the S&P 500 up 16.8% YTD and the Nasdaq-100 up 22.3% YTD, yet several leveraged/inverse ETFs that short the year’s top-performing sectors have collapsed. Direxion Junior Gold Miners Bear 2x (JDST) is down 89.2%, Direxion Gold Miners Bear 2x (DUST) is down 87.0%, Direxion Semiconductor Bear 3x (SOXS) is down 85.8%, Defiance 2x Long MSTR (MSTX) is down 82.8% and T‑Rex 2x Long MSTR (MSTU) is down 82.7% year to date.

The losses track clear underlying moves: gold is up roughly 60% in 2025 and gold miners have more than doubled, junior miners leading the rally, while semiconductor stocks benefitted materially from AI-driven demand increases. Strategy (MSTR), formerly MicroStrategy, is off more than 45% YTD as crypto sentiment turned, producing roughly double losses in 2x funds tied to MSTR.

These outcomes underscore the mechanics and risks of daily-resetting leveraged products: volatility decay and compounding across trending moves can produce near-total capital loss for buy-and-hold investors, and even small expense differentials matter (MSTU’s lower expense ratio saved ~0.1% YTD). Investors should treat these vehicles as short-term tactical tools with strict position sizing and active monitoring rather than long-term hedges.

Key Decisions for Investors

• Avoid using inverse or leveraged ETFs as buy-and-hold instruments and limit allocations to short-duration tactical trades with strict position-size limits
• If currently exposed to these funds, consider trimming positions or exiting to stop further decay given documented losses exceeding 80% in multiple products
• Use non-levered exposures or options for hedging core equity or commodity risk instead of daily-resetting leveraged ETFs, and reassess hedges after large trend moves such as gold's ~60% gain
• Monitor the specific drivers cited (gold price momentum, AI-driven semiconductor demand, and crypto sentiment impacting MSTR) and set predefined stop-loss or time-based exit rules, noting that expense ratios and daily compounding materially affect returns