A.I.M. Users Bulletin Board

[ls7550]

Hi Bob

I can only answer for myself as to why I wouldn't AIM a 3X Leveraged ETF.

Half in 2x, half in bonds even rebalanced once yearly can compare reasonably to 100% 1x portfolio visualizer

I'd agree that AIM'ing them individually isn't appropriate as AIM is more aggressive than simple rebalancing back to target weightings once/year such as 50/50 target weightings.

One use is that LETF's can avoid having to sell bonds. If for instance you were holding $100K of stock value that had declined to $70K and you wanted to top back up to $100K again you can add $30K of stock exposure by selling $30K of 1x and buying $30K of 2x with the sale proceeds. Perhaps avoiding having to sell out of fixed term bonds to rebalance. Later if stock value has risen to $120K and you want to reduce by $20K, you might sell $20K of 2x holdings to buy $20K of 1x holdings with the sale proceeds.

Another benefit is potential tax reduction. For example if interest/dividends are taxed 15% but you can benefit from capital gains without any tax then something like the Portfolio 2 choice in the above link could be appropriate. Note in that how a 50/50 stock/gold barbell is being used as a (volatile) global unhedged bond proxy.

Regards. Clive.