Benjamin Felix · The Rational Reminder Podcast · The Truth About Leveraged ETFs
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explains that a 2x leveraged index ETF gives $2,000 exposure for every $1,000 invested, doubling exposure to the underlying index's daily returns
$1,000 investment → $2,000 exposure
“Now imagine that this fund tracks something like an index. So something that has about 1% daily volatility. Now in this case, the break even return, the underlying stock is to be up, I think about 8.4% for the levered ETF and the underlier to have the same.”
“We built a set of ETFs, a set of beta exposures and a set of smart beta exposures… today we're the fifth largest ETF manufacturer in the world.”
“It gives exposure to international equities… companies that have high return on equity, low financial leverage and stable year-on-year earnings growth… provide defensive characteristics and historically outperformed during periods of higher market volatility.”
“So probably about a 40% exposure. So like, $8,000… when you equal weight… you increase your exposure to those small or medium-sized companies.”
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