Increasing leverage from 2x to 3x amplifies both investor losses through path dependence and fund rebalancing costs, requiring substantially larger daily trading adjustments.

"A 3x fund beginning with assets of A starts with exposure of 3A. After a one-day benchmark return of r, restoring exposure to three times the fund's new NAV requires an approximate gross adjustment of 6Ar. Moving from 2x to 3x raises both sides of the structure: investors take greater path-dependent exposure, while the fund must make larger daily adjustments to maintain that exposure."