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Wednesday, July 09, 2025 11:07:08 AM
Quarterly Update for Leveraged ETF Backtesting 2.0
My previous post left out an important factor for AIM investing – the amount of cash at the end of the test period. This data point enforces the power of AIM by beating buy-and-hold with less money invested on average, and also gives an indication of the investment performance at the end of the period, showing whether AIM was buying shares or spinning off shares for cash. As such, it's an important metric to report in the summary.
The problem of high levels of cash typically don't exist with leveraged ETFs because of the higher volatility than non-leveraged investments. Any extended period of cash spinoff is followed by periods where AIM is buying shares, lowering cash. The remaining problem of the higher potential of running out of cash on large drawdowns is handled well by using the drawdown curve strategy I've previously posted.
My previous post left out an important factor for AIM investing – the amount of cash at the end of the test period. This data point enforces the power of AIM by beating buy-and-hold with less money invested on average, and also gives an indication of the investment performance at the end of the period, showing whether AIM was buying shares or spinning off shares for cash. As such, it's an important metric to report in the summary.
The problem of high levels of cash typically don't exist with leveraged ETFs because of the higher volatility than non-leveraged investments. Any extended period of cash spinoff is followed by periods where AIM is buying shares, lowering cash. The remaining problem of the higher potential of running out of cash on large drawdowns is handled well by using the drawdown curve strategy I've previously posted.
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