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