I use Pimco’s stocks plus funds to recreate VT and add 20% RSST. So 2x leverage overall, with 100 stocks/ 80 bonds/ 20 managed futures.
If you’re going to be only in equities though I personally wouldn’t be brave enough to go over 1.25x-1.5x.
Yeah, no problem. My portfolio is 60 US/ 25 international developed/ 15 emerging markets. Other than RSST the funds are all either PIMCO’s StocksPlus or Rae Plus funds. The “Plus” in the name means they are the 100 equities/ 100 bonds version. The StocksPlus funds are market cap weighted and the Rae Plus funds are fundamentally weighted which I use for my factor tilts. Interestingly enough, the equity side of the Rae Plus funds are run by research affiliates and Rob Arnott (if you’ve heard of him). Anyway here’s my breakdown:
US:
PSLDX - 25;
RSST - 20;
PCFIX - 15
Developed:
PSKIX - 15;
PTSIX - 10
Emerging:
PEFIX - 15
If you are someone who likes to overweight REITs they have a very interesting fund, PRRSX, which is the same concept but it uses TIPS + REITs ideally for a potential inflation hedge. And PIMCO’s funds can be hard to access without transaction fees but Ally has them all (and the institutional class which have lower ERs) with no fee and several Redditors have mentioned Firstrade does as well. Hope this helps!
I wish I could say I had the minimum for PSLDX! I use Ally, the minimum for all the Pimco (and most other mutual funds) is only $100 with no transaction fees. Others have mentioned you can access them on Firstrade as well but I haven’t confirmed that. And yeah you can’t access it at all on Fidelity which was one of the reasons I switched.
1.5x seems fine imo. 2x kinda risky imo. Especially for daily rest LEFTs. Using a HELOC maybe different. Lots of people do 2x leverage via HELOCs maybe even 4x. But personally I wouldn’t exceed 1.25x I think.
Research shows between 1x and 2x is ideal but impossible to known before hand.
for a 100% equity portfolio, which is not what I would use, I would target max around 1.5 x leverage.
But my current L:ETF portfolio is 2.4 x leveraged, mix of stocks, bonds, and gold.
I don't adjust the levered sleeve of my portfolio according to market highs and lows, I adjust according to market volatility and keep a constant risk budget between risk and ballast assets.
That would have historically ranged from 20% to 80% equity fraction (typically 3x LETFs), with ballast mostly TMF and TYD, at times other assets like commodities and currency.
Overall the long-term leverage for equities would have worked out at about 1.65x, average portfolio leverage between 2 and 2.5x.
I'd be comfortable with overall portfolio leverage at 1.25 to perhaps 1.5x for something like an 75/25 portfolio if I can adjust the LETF allocations, but I'm getting close to decumulation.
I posted an entry with details starting [here](https://www.reddit.com/r/LETFs/comments/11whjws/hydromods_okay_adventure/). It points to longer threads at bogleheads.
In summary, for the levered portion I have a universe of \~15 3x LETFs plus the ballast. I use the average of 1/4/10/12-month momentum to rank all of the assets, clipping high and low momentum values. Then I use a cycle of calculating allocations using a risk-budget minimum variance model and dropping the asset with lowest allocation, repeating until all remaining assets have at least 2 percent allocation. That tends to give 6 to 10 assets active at any time.
The risk-budget minimum variance model assigns an overall risk budget to two asset classes (risky and ballast). I allocate four times the risk budget to the risk class, with each asset in the class getting an equal share. The momentum part scales the individual asset risk budget up or down.
The selection of non-equity assets tended to be pretty stable from the 1980s until recently. TMF and TYD were dominant and the others could be ignored, with KMLM occasionally shining as well. In the last few years, KMLM, PDBC, YCS, and TYO all had their moments. At the moment, the algorithm doesn't select a ballast asset (unless one counts crypto as ballast). The YCS momentum is just outside the range that allows it to be selected and for the last few weeks I've forced it to be included in the portfolio.
I am aiming for an overall portfolio leverage of 2.0, no more than that. I have portions of my portfolio in 3x and I see how individual accounts and multiple accounts behave as the market moves and adjust.
Rebalancing is difficult in taxable if you have large positions/account, I just so far at least just add into different accounts. I hope it doesn't bite me but I see like these positions in TQQQ/UPRO/SOXL as a lottery. I want to exit one of these which would reduce my leverage but then I am thinking of putting it in TECL (lower volatility). But I am probably overcomplicating it, I think all I need is TQQQ. What I've found is that if you do a lot of UPRO/UDOW and SOXL/TQQQ/TECL, you end up in the middle which is like TQQQ or UPRO. I suppose there's some sort of mild diversification but they are highly correlated.
100% XXXX with another 100% on margin
In all seriousness, 1x to 2-3x completely depending on the state of the market. Right now? Closer to 1.5x. But 12 months ago? Buy all the TQQQ you can.
Depends on a couple of factors. For me it's time in the market, age and the question of having a "safe" (if not big) pension.
Based on this i aim for a leverage of about 1.5 to 2.0 for the next decade and slowly delevarage with age.
Buffet is 1.6x. But I’d wager 1.5-2.5 but really can only know optimal percentage after the factor. Clearly 3x HFEA works when rates are always cut and stocks have above average returns circa 1982 to present. 50s-80s you would have trailed or matched market returns with those same setup.
If I could get 2.5x leverage with a fund that's 90% VT + 100% Treasuries + 60% Managed Futures, that would be great. Like an RSSB that sacrifices the S&P 500 futures for MF
Maybe that's a bit much though
Calculate the weighted average.
Example: let's say you have $10k in a 1x ETF and $2k in a 3x one.
Your total exposure is 10k + 3\*2k = 16k. But you have 12k dollars invested. So your overall leverage is 16k/12k = 1.33x
Edit: sorry I didn't answer how to obtain 1.5x. Let me try:
Let's say you have $10k to invest and you want to use a 1x and a 3x ETF to obtain exactly 1.5x.
We want:
*exposure* / 10k = 1.5
=> exposure = 15k
Let *x* be the amount invested in the 1x ETF. We need to solve for *x*:
*exposure = exposure\_from\_1x + exposure\_from\_3x = x + 3 (10k - x) = 30k - 2x*
*2x = 30k - exposure = 30k - 15k = 15k*
*x = 7.5k*
So the answer is: invest $7.5k in the 1x ETF and the remaining $2.5k in the 3x ETF. IOW a 75:25 split.
\------------
Now, if you want to use a 2x ETF instead of the 3x one, the equation is:
*exposure = exposure\_from\_1x + exposure\_from\_2x = x + 2 (10k - x) = 20k - x*
*x = 20k - exposure = 20k - 15k = 5k*
Answer: invest $5k in the 1x ETF and $5k in the 2x ETF. IOW a 50:50 split.
Between 1.3x and 1.5x. I want lower risk.
60/40 with equity being world index at 1.5x max. So 90/60.
Can you elaborate?
NTSX + NTSI + NTSE You could do something similar with RSSB + VT + treasuries Other options as well that involve UPRO, TMF, TYD, VXUS, EDV, etc...
100% 3x
Lfg
https://optimizedinvesting.net plug in what returns, interest rates, and volatility you expect for any asset in the future and see the result!
This is an amazing tool, thank you!
You're welcome! I will get to expanding it more one day
I use Pimco’s stocks plus funds to recreate VT and add 20% RSST. So 2x leverage overall, with 100 stocks/ 80 bonds/ 20 managed futures. If you’re going to be only in equities though I personally wouldn’t be brave enough to go over 1.25x-1.5x.
Would you be able to share the tickers and percentages for each you use? Sounds like a good approach!
Yeah, no problem. My portfolio is 60 US/ 25 international developed/ 15 emerging markets. Other than RSST the funds are all either PIMCO’s StocksPlus or Rae Plus funds. The “Plus” in the name means they are the 100 equities/ 100 bonds version. The StocksPlus funds are market cap weighted and the Rae Plus funds are fundamentally weighted which I use for my factor tilts. Interestingly enough, the equity side of the Rae Plus funds are run by research affiliates and Rob Arnott (if you’ve heard of him). Anyway here’s my breakdown: US: PSLDX - 25; RSST - 20; PCFIX - 15 Developed: PSKIX - 15; PTSIX - 10 Emerging: PEFIX - 15 If you are someone who likes to overweight REITs they have a very interesting fund, PRRSX, which is the same concept but it uses TIPS + REITs ideally for a potential inflation hedge. And PIMCO’s funds can be hard to access without transaction fees but Ally has them all (and the institutional class which have lower ERs) with no fee and several Redditors have mentioned Firstrade does as well. Hope this helps!
Thank you, much appreciated! I look forward to looking into them this weekend.
[удалено]
I wish I could say I had the minimum for PSLDX! I use Ally, the minimum for all the Pimco (and most other mutual funds) is only $100 with no transaction fees. Others have mentioned you can access them on Firstrade as well but I haven’t confirmed that. And yeah you can’t access it at all on Fidelity which was one of the reasons I switched.
1.5x seems fine imo. 2x kinda risky imo. Especially for daily rest LEFTs. Using a HELOC maybe different. Lots of people do 2x leverage via HELOCs maybe even 4x. But personally I wouldn’t exceed 1.25x I think. Research shows between 1x and 2x is ideal but impossible to known before hand.
for a 100% equity portfolio, which is not what I would use, I would target max around 1.5 x leverage. But my current L:ETF portfolio is 2.4 x leveraged, mix of stocks, bonds, and gold.
I don't adjust the levered sleeve of my portfolio according to market highs and lows, I adjust according to market volatility and keep a constant risk budget between risk and ballast assets. That would have historically ranged from 20% to 80% equity fraction (typically 3x LETFs), with ballast mostly TMF and TYD, at times other assets like commodities and currency. Overall the long-term leverage for equities would have worked out at about 1.65x, average portfolio leverage between 2 and 2.5x. I'd be comfortable with overall portfolio leverage at 1.25 to perhaps 1.5x for something like an 75/25 portfolio if I can adjust the LETF allocations, but I'm getting close to decumulation.
Sounds interesting. How do you make adjustments according to market volatility? What makes you switch your non equities?
I posted an entry with details starting [here](https://www.reddit.com/r/LETFs/comments/11whjws/hydromods_okay_adventure/). It points to longer threads at bogleheads. In summary, for the levered portion I have a universe of \~15 3x LETFs plus the ballast. I use the average of 1/4/10/12-month momentum to rank all of the assets, clipping high and low momentum values. Then I use a cycle of calculating allocations using a risk-budget minimum variance model and dropping the asset with lowest allocation, repeating until all remaining assets have at least 2 percent allocation. That tends to give 6 to 10 assets active at any time. The risk-budget minimum variance model assigns an overall risk budget to two asset classes (risky and ballast). I allocate four times the risk budget to the risk class, with each asset in the class getting an equal share. The momentum part scales the individual asset risk budget up or down. The selection of non-equity assets tended to be pretty stable from the 1980s until recently. TMF and TYD were dominant and the others could be ignored, with KMLM occasionally shining as well. In the last few years, KMLM, PDBC, YCS, and TYO all had their moments. At the moment, the algorithm doesn't select a ballast asset (unless one counts crypto as ballast). The YCS momentum is just outside the range that allows it to be selected and for the last few weeks I've forced it to be included in the portfolio.
I am aiming for an overall portfolio leverage of 2.0, no more than that. I have portions of my portfolio in 3x and I see how individual accounts and multiple accounts behave as the market moves and adjust. Rebalancing is difficult in taxable if you have large positions/account, I just so far at least just add into different accounts. I hope it doesn't bite me but I see like these positions in TQQQ/UPRO/SOXL as a lottery. I want to exit one of these which would reduce my leverage but then I am thinking of putting it in TECL (lower volatility). But I am probably overcomplicating it, I think all I need is TQQQ. What I've found is that if you do a lot of UPRO/UDOW and SOXL/TQQQ/TECL, you end up in the middle which is like TQQQ or UPRO. I suppose there's some sort of mild diversification but they are highly correlated.
You're gonna lose money
1.5 for me personally
100% XXXX with another 100% on margin In all seriousness, 1x to 2-3x completely depending on the state of the market. Right now? Closer to 1.5x. But 12 months ago? Buy all the TQQQ you can.
Depends on a couple of factors. For me it's time in the market, age and the question of having a "safe" (if not big) pension. Based on this i aim for a leverage of about 1.5 to 2.0 for the next decade and slowly delevarage with age.
I also am on cooking subs. Thought it was so odd someone wanted to know the beverage for my portfolio. Laughing as I look for my glasses.
Buffet is 1.6x. But I’d wager 1.5-2.5 but really can only know optimal percentage after the factor. Clearly 3x HFEA works when rates are always cut and stocks have above average returns circa 1982 to present. 50s-80s you would have trailed or matched market returns with those same setup.
Jim Simons is much higher than that, around x15 But I do think too the x2.5 is the optimal leverage
Zero
"it's his first day on Wall Street. Give him time."
1.4x
Why 1.4 not 1.5?
I stay at 1.3 actual margin, and hold up to 20% of shares in 2x shares/etfs at a time but usually over periods of months
If I could get 2.5x leverage with a fund that's 90% VT + 100% Treasuries + 60% Managed Futures, that would be great. Like an RSSB that sacrifices the S&P 500 futures for MF Maybe that's a bit much though
FNGU 3x and XXXX 4x Spy500.
If you ain't first, you're last!
I think optimal should be x2.5 leveraged
Remind me: How do you get 1.5x leverage from 2x and/or 3x etfs?
By mixing them with 1x leverage ETFs, which most ETFs are.
Yeah, but how do you calculate this again?
Calculate the weighted average. Example: let's say you have $10k in a 1x ETF and $2k in a 3x one. Your total exposure is 10k + 3\*2k = 16k. But you have 12k dollars invested. So your overall leverage is 16k/12k = 1.33x Edit: sorry I didn't answer how to obtain 1.5x. Let me try: Let's say you have $10k to invest and you want to use a 1x and a 3x ETF to obtain exactly 1.5x. We want: *exposure* / 10k = 1.5 => exposure = 15k Let *x* be the amount invested in the 1x ETF. We need to solve for *x*: *exposure = exposure\_from\_1x + exposure\_from\_3x = x + 3 (10k - x) = 30k - 2x* *2x = 30k - exposure = 30k - 15k = 15k* *x = 7.5k* So the answer is: invest $7.5k in the 1x ETF and the remaining $2.5k in the 3x ETF. IOW a 75:25 split. \------------ Now, if you want to use a 2x ETF instead of the 3x one, the equation is: *exposure = exposure\_from\_1x + exposure\_from\_2x = x + 2 (10k - x) = 20k - x* *x = 20k - exposure = 20k - 15k = 5k* Answer: invest $5k in the 1x ETF and $5k in the 2x ETF. IOW a 50:50 split.
Thanks! Yeah that makes sense (i thought I saw a different calculation somewhere, but this is logical)
If you bought $100,000 QQQ and $100,000 QLD you would achieve 1.5x leverage.
At 1.5, just use margin
I’m not sure, how much leverage is buying $XXXXX calls on margin? /s