Leverage in your investments...

[w1rbelw1nd]

i mean what it does is to regress the past returns data with returns of several ETF and choose the one with the highest correlation over the past period. whether it would continue to have high correlation in its future performance is unknown?

I suspect that the mix of ETFs with the highest correlation will be shown. It is not an indication in all cases that an investor can replicate the returns/volatility of the active fund, but that that mix of ETFs is the "best-fit". How well it fits currently and in the future.... really have to depend on the securities the fund is investing in and whether there is a change in fund mandate, I suspect.

 

[Niaoson]

Bookmarked!

 

[Shiny Things]

i mean what it does is to regress the past returns data with returns of several ETF and choose the one with the highest correlation over the past period. whether it would continue to have high correlation in its future performance is unknown?

Exactly right. The replicator tool is just answering the question "what's been the best-correlated {ETF|ETF pair} in the past?". It's not trying to answer the question "what will be the best-correlated {ETF|ETF pair} in the future?".

 

[stl_67]

wow Shiny i didnt know IB got such function.

then might as well do portfolio margin with Interactive Brokers if you can put >100k. you can go ahead to buy those ETF through IB also and you can replicate the same performance at a much cheaper cost.

just FYI, i do leverage with CFD stocks in IB. their rates and commissions are dirt cheap. my gross leverage is about 1x to 3x and my return net of all fees so far is about 2x of S&P/Dow/STI.

Hi,

Can I use IB to leverage. Say i put in 100k cash, can I buy 200k worth of ETF?

Thank you.

 

[stl_67]

To add on, yes the Allianz fund is consistently giving 8% coupon but the NAV is dropping. I am about 4% down. Thanks shiny and the rest for contributing this thread, I migh want to sell the fund when it recovers.

 

[alexchia01]

Hi,

Can I use IB to leverage. Say i put in 100k cash, can I buy 200k worth of ETF?

Thank you.

This is not a wise thing to do.

Leveraging is good for short-term trading.

For long-term trading and investing, it's better to not leverage.

ETF is a long-term trading/investing product, not ideal to leverage.

Beside, you have 100k, which is already quite a lot, might as well buy 100k of ETF.

Don't be too greedy and make the wrong action.

 

[Shiny Things]

Hi,

Can I use IB to leverage. Say i put in 100k cash, can I buy 200k worth of ETF?

Thank you.

Sure you can, but as Alexchia says, this is a deeply dumb thing to do with your long-term buy-and-hold money.

 

[w1rbelw1nd]

Hi,

Can I use IB to leverage. Say i put in 100k cash, can I buy 200k worth of ETF?

Thank you.

I think you can read the book "life cycle investing" (borrow it from the NLB) to learn more about leverage investing. Should provide an interesting perspective for leveraged investing.

 

[wahkao3]

I think you can read the book "life cycle investing" (borrow it from the NLB) to learn more about leverage investing. Should provide an interesting perspective for leveraged investing.

can summarize the good teachings of that book?

 

[stl_67]

alexchia, you are right. i am greedy. on the other hand, i view it like a forced saving in the long run.
at the moment i put in 100k with std chart and they lend me another 100k to buy this fund. i got about 1400 distribution every month and my COF is about $130. difference is about 15% yield. the distribution is then used to offset my borrowing. I tought this was a good deal but seems like I might not be right.

will visit the libary this weekend.

 

[focus1974]

alexchia, you are right. i am greedy. on the other hand, i view it like a forced saving in the long run.
at the moment i put in 100k with std chart and they lend me another 100k to buy this fund. i got about 1400 distribution every month and my COF is about $130. difference is about 15% yield. the distribution is then used to offset my borrowing. I tought this was a good deal but seems like I might not be right.

will visit the libary this weekend.

This is what most hnw do.. I think it's alrite as long as you keep your leverage down to 30% of your networth. 50% might be pyschologically hard to swallow for equities. Eequities is not like property wor... you cannot leverage 80% and feel happy about it ..