January 2020
To Investors:
In 2019, global equities (VT) and real estate (VNQ) returned 27% and 29%, respectively, while long-term Treasuries (TLT) delivered 14%. Combined, the Income and Growth investable benchmark rose by 20%.
Over the past decade, the investable benchmark portfolios performed extremely well. Income & Growth returned 9% annualized, or 128% in total return, with a worst calendar year of -6%.
Last year, the leveraged investable benchmarks delivered spectacular gains of 43% to 92%. Their trailing 10-year annualized returns are also astounding at 18% to 35%, producing total returns of 442% to 1,847%.
These efficiently balanced portfolios enable the use of leverage which often enhances performance. Over the past decade, we estimate that Income & Growth 2x delivered 442% in total return, with a worst calendar year of -11%. Over the same period, the S&P 500 rose by 253%, with a worst year of -37% in 2008.
However, historical performance can never guarantee future results, and leveraged ETFs do not always function as expected. Therefore, we typically recommend that investors combine passive indexing, via the investable benchmarks, with ETF PM’s active risk controls, and/or our absolute return strategies.
In 2019, our absolute return strategies gained 13% to 33%. The Tactical 3x portfolio gained 33%, while our Market Neutral 3x and Max Alpha strategies both returned 13%. In addition, over the past 3.8 years since inception, Tactical 3x delivered 75% in total return versus a gain of 69% for the S&P 500.
As always, please contact us if you would like to plan a call and/or meeting to discuss.
We wish you and your family a happy, healthy and prosperous New Year!
David S. Kreinces
Founder & Portfolio Manager
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