Margin Fiend or Fool
Posted: May 1st, 2019, 10:30 pm
Hi Fellow Fools,
I'm relatively new to this community but been in markets for over a decade. I've started this thread to discuss and hopefully post updates on my investment strategy using margin and get some honest feedback and suggestions for investment trusts / ETFs which may be suitable and I can do further homework on. I started in Jan as my previous employment had very strict personal investment policies.
My plan is to the emulate BTLs use of leverage to enhance returns - I would say without any hassle, but a better way of phrasing this is 'with hassle i enjoy' - which is digging through the annual reports etc. I use Interactive Brokers and my effective cost of funding to me is +1% to the respective CB base rate; the drawback I have found with IB is they do not quote the Specialist Fund segment of the LSE which is becoming increasingly frustrating.
As I posted in another thread, for every unit; I buy x1.3 using margin to finance the balance. I have split my target portfolio into three - REITS, Income and Growth with a target of a third into each segment. I have added the below assets in Jan/Feb which I view as 'foundation assets' from which to build (stealing from BBOX's style). Timing wise, I've started with a decent slice of luck on my initial capital input and going forward am using monthly portfolio additions rather than try and time the market. I feel focusing on GBP, USD and EUR makes the most sense but happy to hear what others think. Lastly, I do not re-balance to x1.3 market if the market rallies, my margin just declines is the current plan.
REIT - BBOX
Income - TRIG, GRP, JLEN
Growth - VWRL
One thing I recognise is how both REIT + Income sectors are concentrated. This is something I am in the process of correcting over time - currently e-mailing ERE.EU, European residential REIT, and this will be the next addition if the numbers stack up (I will write a post on this if they do). The other aspect is the double leverage - I am using margin to buy leveraged funds with the exception of VWRL. The reason I am comfortable with this is the trusts have inherent inflation correlation due to the underlying assets having contracts linked to RPI; in addition I am comfortable with interest rate risk and my personal view is they will never be going back to the pre-08 levels due to demographics - UKT 30y gilt is 1.7%.
I'd really appreciate any suggestions for investment trusts or ETFs which would fit the above strategy well. Low volatility + draw-down, an underlying diversification to a number of assets and as little correlation to the general market as possible is the aim.
Lastly I would ask thoughts on the general idea
Thank you
I'm relatively new to this community but been in markets for over a decade. I've started this thread to discuss and hopefully post updates on my investment strategy using margin and get some honest feedback and suggestions for investment trusts / ETFs which may be suitable and I can do further homework on. I started in Jan as my previous employment had very strict personal investment policies.
My plan is to the emulate BTLs use of leverage to enhance returns - I would say without any hassle, but a better way of phrasing this is 'with hassle i enjoy' - which is digging through the annual reports etc. I use Interactive Brokers and my effective cost of funding to me is +1% to the respective CB base rate; the drawback I have found with IB is they do not quote the Specialist Fund segment of the LSE which is becoming increasingly frustrating.
As I posted in another thread, for every unit; I buy x1.3 using margin to finance the balance. I have split my target portfolio into three - REITS, Income and Growth with a target of a third into each segment. I have added the below assets in Jan/Feb which I view as 'foundation assets' from which to build (stealing from BBOX's style). Timing wise, I've started with a decent slice of luck on my initial capital input and going forward am using monthly portfolio additions rather than try and time the market. I feel focusing on GBP, USD and EUR makes the most sense but happy to hear what others think. Lastly, I do not re-balance to x1.3 market if the market rallies, my margin just declines is the current plan.
REIT - BBOX
Income - TRIG, GRP, JLEN
Growth - VWRL
One thing I recognise is how both REIT + Income sectors are concentrated. This is something I am in the process of correcting over time - currently e-mailing ERE.EU, European residential REIT, and this will be the next addition if the numbers stack up (I will write a post on this if they do). The other aspect is the double leverage - I am using margin to buy leveraged funds with the exception of VWRL. The reason I am comfortable with this is the trusts have inherent inflation correlation due to the underlying assets having contracts linked to RPI; in addition I am comfortable with interest rate risk and my personal view is they will never be going back to the pre-08 levels due to demographics - UKT 30y gilt is 1.7%.
I'd really appreciate any suggestions for investment trusts or ETFs which would fit the above strategy well. Low volatility + draw-down, an underlying diversification to a number of assets and as little correlation to the general market as possible is the aim.
Lastly I would ask thoughts on the general idea
Thank you