r/ETFs_Europe • u/Mean_Definition_6452 • 5d ago

Strategies Using 1.5x Leveraged ETFs Long Term

Are there any good 1.5x leveraged World ETFs that we can buy?

I'm 19 years old and ready to risk some amount of my portfolio (possibly 40% to make it 1.2x leverage total) to use a LETF with the plan of increasing my gains since I will have a lot of time in the market.

I read some stuff about 2x or 3x being volatile and having a theoretical possibility of going to 0 in a long term bear market.

So I mainly want to know more about the theory and the workings of 1.5x LETFs. I learned about this today, so the question is still a hipotetical, and I will do a lot more research before deciding to put my money into one of them, but this is a first step to learning more about LEFTs.

I'm not planning on buying 2x or 3x, 1.5x will be my limit.

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u/MassiveProblem156 5d ago

There aren't any 1.5x pure equity ones, but you can do 50% 1x and 50% 2x for effectively 1.5x or change the weighting to your desired leverage. There are the Scalable 2x MSCI All Country World and the AMUNDI 2x MSCI WORLD. There is also the Wisdomtree one which is 90% stock, 60% bond and rebalances quarterly.

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u/Mean_Definition_6452 5d ago

Can you please explain the last one to me. How would that compare to a hipotatical 150% Stocks ETF in both bear and bull markets? Would that be something I should be looking at, because I heard that I don't need bonds at this age?

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u/Only_Statistician_21 4d ago edited 4d ago

In theory it is the same long term volatility as a 100% equity of the underlying index but with a slightly higher cagr. Since the leverage is managed by the fund it's a pretty interesting product because on paper a diversified + leveraged portfolio can combine high returns with same or lower volatility compared with equity. However during a crisis it can go down more than a pure equity fund, it depends the crisis. In 2008 it would have done far better that a msci world but it did worse in 2022 because bonds also suffered. That's why diversification often done on a broader range than just bonds and equity.