Leveraged market portfolio

Most of my net worth is in Vanguard ETFs on Interactive Brokers. So during the Covid crash, I lost (on paper!) a significant fraction of my net worth, and a large sum in absolute terms. Still, I never felt tempted to sell and didn’t lose a single minute of sleep about it. So I’m now thinking that I’m sufficiently risk tolerant to go for a leveraged market portfolio (say long 1.5x the market). (I already had this thought in spring, and now of course wish I had acted on it.)

Needless to say, in the past decade a leveraged portfolio would have crushed, but we can’t expect the coming decade to be the same as the past one. There’s another argument for using leverage when you’re young: most of your retirement capital will come from earnings between now and your retirement, so at the moment you only have a small fraction of your eventual net worth to invest, so it seems prudent to “invest more than what you currently have”.

Has anyone thought about using leverage, or is already doing it? I understand that leveraged ETFs are not suitable for long term investment, so I’d buy index futures on margin. Possible downsides of this approach:

  • Requires periodic work to roll the futures, and rebalance the portfolio (weekly?) to maintain the leverage ratio.
  • Some chance the tax authorities classify you as a professional securities trader?

I don’t. But you can find infos here:

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