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Episode 259: FI With Friends, Bid/Ask Spreads, Margin vs. Leveraged ETFs and GDMN

Risk Parity Radio

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The Best Way to Implement Leverage Using Leveraged ETFs

Ron: I wanted to know at which point does it make more sense to use Leverage ETFs instead of using a margin loan to gain leverage. Ron used the hedge-funny 55uPro slash 45TMF portfolio as my example. He then established a baseline result in portfolio visualizer using SPY slash TLT and levering that up with a 0% interest loans. Now, he ran the SPY slashTLT split with increasing the margin loan interest rates. As you can see, somewhere around 1.5%, the performance of the margin loan method begins to degrade below the leverageETF method.

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