Leveraging the permanent portolio? Futures?
Posted: Wed Aug 26, 2015 5:26 pm
Long time reader, first time poster. I am wondering what this community's thoughts are on leveraging the PP or its variants discussed here? Part of the "draw" of the PP is low volatility. Of course, the simplest "leverage" would be to simply omit cash (= 33/33/33). Brief analysis suggests a slightly higher CAGR for this latter portfolio (CAGR approx. 1% higher than 25x4) since 1975, of course with significantly increased volatility and drawdowns.
On a semi-related note, has anyone used futures in constructing their PP? Say you had $1M to invest. Why not use a couple ES contracts and then make up the rest with SPY or whatever to create a synthetic 250K equity basket. Could do the same for the gold and treasury components. I realize of course there is a "built in" interest cost, which is at present relatively minimal.
Looking forward to any thoughts!
On a semi-related note, has anyone used futures in constructing their PP? Say you had $1M to invest. Why not use a couple ES contracts and then make up the rest with SPY or whatever to create a synthetic 250K equity basket. Could do the same for the gold and treasury components. I realize of course there is a "built in" interest cost, which is at present relatively minimal.
Looking forward to any thoughts!