Simulated Performance Of Leveraged Bond Funds Since 1962

|
About: Direxion Daily 30-Year Treasury Bull 3x Shares ETF (TMF), TYD, UBT, UST, Includes: DXKLX
by: Jonathan Cooper
This article is exclusive for subscribers.
Summary

Leveraged bond funds have outperformed unleveraged peers during the past seven years.

Back-testing shows that simulated, intermediate-duration leverage bond funds would have gained 11.6% and 18.1%/year since 1962.

The simulated bonds have under-performed available leveraged ETFs over the past seven years, so their performance may be a conservative estimate.

Leveraged bond funds may be a strong addition to a diversified, long-term investment portfolio.

Given the current low-yield environment, investors may still be skeptical of bonds, leveraged or otherwise.

Summary and Thesis

I am interested in back-testing portfolios which includes leveraged bond funds. However, I am limited by the relatively recent creation of such funds.

In the last seven years, leveraged bond funds outperformed