February 19, 2020
I utilize leveraged index ETFs to optimize my returns based on market fundamentals and technicals. Leveraged funds do not, in and of themselves, increase the risk level of one's portfolio rather, it depends on how they are used. As an example, in some accounts within my retirement portfolio, where I am not allowed to hold margin, I employ a baseline 60% to 40% split between index equity etfs and index bond etfs. I use a non-leveraged index bond etf for the 40%, a non-leveraged index equity etf for 15%, and a 3X leveraged index etf for the remaining 45%. This allows me to hold a level of equity exposure from 15% to 150% on a short term basis by simply buying and selling the 3X etf. However, I hold my baseline 60 / 40 split for the vast majority of the time. The non-leveraged etfs allow me to capture some returns from dividends as well, and I rarely go above 125% equity exposure. However, the ability to move in and out of marginally higher levels of equity exposure allows me to achieve a somewhat higher return than if I simply held the 60/40 equity / bond split all of the time. Not having the 3x leveraged etfs would eliminate my ability to trade using my method, which only involves a moderate level of risk. I strongly encourage the SEC to refrain from establishing regulations that will hinder my ability to trade in a way that optimizes my returns while retaining an acceptable level of risk. Thank you.