Replies to post #35424 on A.I.M. Users Bulletin Board (AIMUSERS)

[ls7550]

Leveraged fund AIM's

Always interesting to compare Conrad.

From January 2011, a leveraged based SPY AIM (last chart in the following image) is up 16.8% annualised.

There's a few others to also compare relative performance with in this image. In each case cash was assumed to have been invested in inflation bonds (TIP). All gains are total (including income, dividends etc), but exclude trading costs/taxes.



The trick with AIM'ing leveraged funds seems to be to also account for the higher volatility i.e. a 2x SPY fund might have twice the volatility of the 1x and to adjust for that halve the amount of stock value initially bought and double up the SAFE, Min Trade Size. For a 3x start with a third of the stock value and scale up the SAFE/MTS values by x3 ...etc.

For example if you would normally allocate 60% stock value, 40% cash to a SPY AIM, if you instead AIM'd a 3x SPY fund, then scale down the stock exposure by 3 (to 20% stock (and hence 80% cash)) and if you would normally opt for 10% Buy SAFE, 10% Sell SAFE for a 1x, then scale that up 3x to 30% Buy SAFE, 30% Sell SAFE. And if you would normally use a 10% minimum trade size, then scale that up 3x to 30% Min Trade Size (all of the above charts used a MTS relative to Portfolio Control (i.e. Newport style - not the more usual percentage of Stock Value amount)).

Clive.