Leveraged ETFs surge in 2026 while facing record shutdowns

The leveraged ETF market in 2026 is seeing record numbers of new funds launching even as the sector faces unprecedented closures, with more than 20 leveraged and inverse ETFs shutting down in April alone. A tale of two ETF markets April 2026 marked a grim milestone for leveraged ETFs. Direxion pulled the plug on ten ETFs effective April 10. Among the casualties were two crypto-adjacent products that tell a revealing story about the current landscape. LMBO, Direxion’s leveraged bull fund, had actually gained approximately 34% before its closure. The problem wasn’t performance. It was assets under management, or more precisely, the lack of them. REKT, the corresponding bear fund, fared worse on both fronts. It fell over 31% and suffered from the same anemic AUM that doomed its bullish counterpart. New leveraged ETFs, often called “baby 2x” products, are flooding the market at a record pace. But many of them are unable to attract the minimum level of investor interest needed to justify their existence. Reports from July indicated the sector was targeting over 20 additional closures in a single month due to underperformance and lack of investor interest. The survivors tell an interesti...