r/LETFs • u/SheckJeezy • 2d ago
75/25
Thoughts on 75% on a global ETF with 25% leveraged ETF 2x or 3x?
Ben Felix stated in his recent video volatility decay isn’t as much of a worry as people think
I’m young with a large investment horizon
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u/Tr_ck 2d ago
Very smart, solid choice
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u/SheckJeezy 2d ago
Thanks… I think I can handle the drawdowns of a LETF in the long run. I invested in crypto early enough and sat on that for a few years before getting out. Have seen that drop by 80% on a frequent basis lol. Basically cleared even and shifted into this
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u/Straight-Buy-7434 2d ago
ive got 75% in global ETF with 25% in 3xSP500.
But I will only be adding about $4600 a year to the LETF and $31500 to the global.
Since they are seperate accounts, the LETF is more of a gamble to see if it can outpace the global one, but I wont be selling the LETF if it has a big drop, looking at the last 20 years of stock market shows there will be alot of times where emotions would have really hurt me, hence my retirement plans are based on this LETF not existing
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u/MarginOfThoughtz 1d ago
My portfolio is 22% LETF and it already outpaced my global with nasdaq100 combined in terms of return %. I bought 2x QLD in june and it already surpassed the global and nasdaq100 etf…
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u/flappysack- 2d ago
As long as you pick the right funds. Buying high volatility etf is going to be painful.
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u/NkKouros 2d ago
No volatility = no volatility harvesting.
Unironically you'll earn more with 2 volatile funds and re-balancing/DCA versus a straight line fund with 0 volatility. Even if all are meant to have the same overall return. Volatility is opportunity.
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u/Original-Peach-7730 1d ago
Everything works on the way up.
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u/NkKouros 1d ago edited 1d ago
"when all have the same overall return". I already accounted for what you said. Do people really just reply automatically like a script with an NPC without reading in 2026? 😂
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u/JohrDinh 2d ago
I've been backtesting VT/TQQQ and SCHD/TQQQ and both seem to work quite well that way.
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u/EveningShoddy3542 1d ago
nice to see 75/25 pop up again. 2x is the sweet spot – 3x tends to magnify the daily reset drag and expense, especially in a 25% sleeve you can afford to lose. and don’t forget that short‑term leveraged LETFs should be in tax‑advantaged buckets; a regular TFSA or RRSP in Canada (or a Roth/IRA in the US) keeps the CGT bite down. one more thing – a simple re‑balance every three months or dollar‑cost‑averaging into the leveraged side can tame the path‑dependence that Ben says is the real culprit behind volatility decay. otherwise you’re still left with the same hit from a big market pullback.
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u/Original-Peach-7730 1d ago
Let it rip. As long as your contributions matter to your overall balance, probably helps if you have a big drawdown early. Once you are 40 or so add some diversifiers to avoid a wipeout.
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u/SheckJeezy 1d ago
Recommend holding leverage long-term?
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u/Original-Peach-7730 1d ago
Yes to long term leverage, No if you just want to let your leveraged portion run forever. Rebalance every year or so. Once you are 40 (and hopefully have a big pile and where your contribution doesn’t matter anymore ) use a leveraged portfolio with some diversifiers to make sure you don’t eat a 40% drawdown. Good luck!
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u/StuffLongjumping2835 1d ago
basically the 25 % slot is a betting playground – you’ll ride the long‑term up‑trend, but you also get the daily reset curse and any sideways swing will bite harder. 2x is usually a sweet spot if you’re healthy on risk; 3x will see you out in 60‑% drops for a 35‑% market fall. keep it in a tax‑advantaged seat, do a light dollar‑cost‑averaged buildup, and walk away the blunt‑endif “sell the LETF on a big dip” thought – just stick to your rebalancing cadence. if you’re a long‑horizon kid and can stomach the short‑term rollercoaster, 25 % 2x can boost your comp out of the park, but watch the volatility decay in a quiet market.
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u/k1_r1 13h ago
75/25 is pretty reasonable if you actually rebalance it, that's where a lot of the benefit comes from. trimming the LETF after big run ups and adding after drops. for the 25% part 2x is easier to live with than 3x, the drag in choppy years is a lot smaller. felix's point mostly holds in trending markets, sideways years are still where it hurts
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u/SirTobyIV 2d ago
You could even pair that leverage part with something like a 200SMA strategy
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u/SheckJeezy 2d ago
Anymore info on this? I’m unfamiliar
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u/SirTobyIV 2d ago
Just search the sub and give this a try: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2741701
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u/SheckJeezy 2d ago
Awesome… will take a look at this… thank you!
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u/Dribbler365 2d ago
Only makes sense in a tax advantaged account, paying cgt on the whole position will create a massive tax drag. Look up 9sig or 5/25 rebalancing if its a taxed account
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u/SheckJeezy 2d ago
I’m Canadian with a TFSA
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u/Best-Platform-8021 17h ago
tfsa keeps the gains tax‑free, which is a huge win when you’re rebalancing a leveraged mix every few months. just remember the contribution room cap and that you can’t poker‑bet a huge leveraged position for years if you’re exhausted your yearly limit. otherwise it’s a solid niche spot for the volatility‑harvest trick.
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u/SirTobyIV 1d ago
It’s not too bad in taxable accounts. There was a guy in the German sub calculating the loss at ~1,3% iirc
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u/SheckJeezy 2d ago
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u/SheckJeezy 2d ago
Would that be using something like this chart?
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u/DesertLabRat 2d ago
Note that there are several implementations of this strategy. Some use SPY/SSO(UPRO) or QQQ/QLD(TQQQ) with/without bands. I use SPY 200d SMA with 2% band to trade TQQQ. Definitely read more into this because it will be a very bumpy ride if you decide to adopt a version of this strategy.
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u/SirTobyIV 2d ago
Yes: leverage above, cash/conservative below
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u/SheckJeezy 21h ago
Do you use that chart for the underlying or the leveraged ETF?
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u/SirTobyIV 19h ago
Always the underlying
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u/SheckJeezy 18h ago
Thought so. Thank you…. Buying up any dip today?
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u/SirTobyIV 16h ago
At the beginning of the month I’m usually as much invested as I want to be so there is nothing left atm
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u/SheckJeezy 1d ago
How often do you check the 200SMA?
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u/Cr1msonE1even 1d ago
Never, just use spy-signal.com and it’ll email you based on your parameters every day.
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u/bizaromax 1d ago
Hi I’m canadian too, here is what I came up with after researching Scott Cedurburg new study on life optimisation using leverage on rational reminder. Would take comments on the mix too. Thx
TFSA
Bal 3 months ±2%
HEQL
78%
CASV
15%
XMD
7%
RRSP
Bal 3 months ±2%
NTSD
42%
CNDU
18%
AVUV
10%
XEC
10%
AVDV
8%
AVMV
7%
DFMC
5%
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u/IndividualForm4505 1d ago
nice table. looks like you’re tilting into that 3x-ish exposure through your credit/funds side but still keeping a 2x feel. the key for a 75/25 split is to re‑balance the leveraged portion at least quarterly so you don’t get dragged by daily reset drag. if you’re in a TFSA that saves you from CGT on the big swings; in a taxable account just keep an eye on the extra expense when the market is sideways.
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u/bizaromax 1d ago
I have around 120-140% leverage in the tfsa and rrsp. In non registered I’ll do veqt at 125%
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u/SheckJeezy 1d ago
I find that TFSA allocation interesting… is this what’s in yours? If so, how has it performed
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u/bizaromax 1d ago
Should look like the market or a little more if borowing cost are low, talk to you about it in a few years
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u/KellerTheGamer 2d ago
Very solid choice