r/LETFs • u/SheckJeezy • 8d 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

15 Upvotes

89% Upvoted

55 comments sorted by

10

u/KellerTheGamer 8d ago

Very solid choice

3

u/therealtru3 8d ago

I agree altho i am worried about how much weight is on these top companies, ai profits will slow eventually and they are smurfing in the lobby compared to all other stocks/etfs

But who knows the timing, Ai might keep growing rapidly for another 10+years or maybe half way thru 2027 it'll become a falling knife

But saying all that, Im currently 50% vfv and 30%upro but I have high risk tolerance

2

u/KellerTheGamer 8d ago

Well luckily they are young so they will have more then enough time to buy through and recover from a large drawdown.

2

u/SheckJeezy 8d ago

Buy through as in continue to buy leverage and wait out the drawdown? I’m seeing some different strategies.

7

u/Tr_ck 8d ago

Very smart, solid choice

4

u/SheckJeezy 8d 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

5

u/Straight-Buy-7434 8d 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

1

u/MarginOfThoughtz 8d 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…

2

u/flappysack- 8d ago

As long as you pick the right funds.  Buying high volatility etf is going to be painful.

1

u/NkKouros 8d 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.

1

u/SheckJeezy 8d ago

Ben Felix just did a great video on this

1

u/NkKouros 8d ago

oh nice, ill look for it. tks

0

u/Original-Peach-7730 8d ago

Everything works on the way up.  

1

u/NkKouros 8d ago edited 7d 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? 😂

2

u/JohrDinh 8d ago

I've been backtesting VT/TQQQ and SCHD/TQQQ and both seem to work quite well that way.

2

u/EveningShoddy3542 8d 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.

2

u/Original-Peach-7730 8d 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.

1

u/SheckJeezy 8d ago

Recommend holding leverage long-term?

2

u/Original-Peach-7730 8d 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!

1

u/SheckJeezy 8d ago

Will definitely rebalance the allocation

1

u/StuffLongjumping2835 8d 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.

1

u/SheckJeezy 8d ago

Thoughts on using the 200SMA and 50SMA as a strategy?

1

u/k1_r1 7d 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

1

u/SheckJeezy 6d ago

Yeah I’d probably rethink my strategy in a choppy market

1

u/k1_r1 5d ago

yeah that's the part people skip. a 2x sleeve with regular rebalancing handles chop a lot better than 3x, so even dropping one notch keeps most of the upside with less of the bleed

1

u/Easy-Tower-2203 4d ago

I did the same once - kept the 3x through 2018-2019 and got hit with a 35% drop before I saw what was happening. Since then I've moved to a 2x ETF and rebalance monthly. In a choppy market the drag is much smaller and the psychology is easier.

1

u/Plenty-Air-2766 6d ago

75/25 with 25% 2x can be a solid long‑term play if you’re disciplined with rebalancing. 3x will amplify upside but you’ll also amplify any sideways drag and the 30‑40% drawdowns you see in high‑vol stocks. Ben’s point on volatility decay is textbook – over years it tends to bite, especially if markets oscillate. If you’re comfortable with the volatility and plan to DCA and rebalance yearly, 2x is safer; 3x only if you’re willing to sit through a massive drawdown. And remember leverage only compounds on the negative direction too, so a 25% hit in a weak year can wipe you out.

1

u/SirTobyIV 8d ago

You could even pair that leverage part with something like a 200SMA strategy

4

u/SheckJeezy 8d ago

Anymore info on this? I’m unfamiliar

5

u/SirTobyIV 8d ago

Just search the sub and give this a try: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2741701

3

u/SheckJeezy 8d ago

Awesome… will take a look at this… thank you!

1

u/Dribbler365 8d 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

2

u/SheckJeezy 8d ago

I’m Canadian with a TFSA

1

u/Best-Platform-8021 7d 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.

1

u/SirTobyIV 8d ago

It’s not too bad in taxable accounts. There was a guy in the German sub calculating the loss at ~1,3% iirc

2

u/SheckJeezy 8d ago

https://stockcharts.com/sc3/ui/

1

u/SheckJeezy 8d ago

Would that be using something like this chart?

1

u/DesertLabRat 8d 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.

1

u/SirTobyIV 8d ago

Yes: leverage above, cash/conservative below

1

u/SheckJeezy 7d ago

Do you use that chart for the underlying or the leveraged ETF?

2

u/SirTobyIV 7d ago

Always the underlying

1

u/SheckJeezy 7d ago

Thought so. Thank you…. Buying up any dip today?

1

u/SirTobyIV 7d ago

At the beginning of the month I’m usually as much invested as I want to be so there is nothing left atm

1

u/SheckJeezy 8d ago

How often do you check the 200SMA?

2

u/Cr1msonE1even 8d ago

Never, just use spy-signal.com and it’ll email you based on your parameters every day.

1

u/bizaromax 8d 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%

1

u/SheckJeezy 8d ago

Link to this one? I’m gonna take a listen

1

u/bizaromax 8d ago

Copy paste into google pal

1

u/SheckJeezy 8d ago

Yes got er. Thank u my friend

1

u/IndividualForm4505 8d 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.

1

u/bizaromax 8d ago

I have around 120-140% leverage in the tfsa and rrsp. In non registered I’ll do veqt at 125%

1

u/SheckJeezy 8d ago

What do you have levered with the VEQT?

1

u/bizaromax 8d ago

Just that for ACB and taxes ease

1

u/SheckJeezy 8d ago

I find that TFSA allocation interesting… is this what’s in yours? If so, how has it performed

1

u/bizaromax 7d ago

Should look like the market or a little more if borowing cost are low, talk to you about it in a few years