> Leveraged funds are the safest way for the average investor to get access to leverage
I... do not agree that leveraged funds are somehow a safest way to access leverage.
Every product including leverage has inherently a non-linear P&L. And from my experience, non sophisticated investors always struggle to grasp the implications of that. It makes returns (on capital) very path dependent, and very nasty during volatile regimes. It breaks the naive assumption of "well I could always hold and wait for the dust to settle".
> unlike margin there is no risk of margin calls
This is a bit of a weird statement. Leverage implies margin, you cannot make it disappear, the funding and associated risk has to come from somewhere, it's just that it is continuously applied, instead of fixed timings.
I do agree that it simplifies planning and reserve management though.
> even Warren Buffet made his biggest early wins on all-in bets.
This is a bit disingenious, note that Buffet did not use leverage...
I... do not agree that leveraged funds are somehow a safest way to access leverage.
Every product including leverage has inherently a non-linear P&L. And from my experience, non sophisticated investors always struggle to grasp the implications of that. It makes returns (on capital) very path dependent, and very nasty during volatile regimes. It breaks the naive assumption of "well I could always hold and wait for the dust to settle".
> unlike margin there is no risk of margin calls
This is a bit of a weird statement. Leverage implies margin, you cannot make it disappear, the funding and associated risk has to come from somewhere, it's just that it is continuously applied, instead of fixed timings.
I do agree that it simplifies planning and reserve management though.
> even Warren Buffet made his biggest early wins on all-in bets.
This is a bit disingenious, note that Buffet did not use leverage...