{"id":184952,"date":"2010-01-15T14:16:00","date_gmt":"2010-01-15T19:16:00","guid":{"rendered":"http:\/\/www.businessinsider.com\/leveraged-mutual-funds-are-the-ultimate-trading-weapons-2010-1"},"modified":"2010-01-15T14:16:00","modified_gmt":"2010-01-15T19:16:00","slug":"how-leveraged-mutual-funds-can-be-vicious-trading-weapons","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/184952","title":{"rendered":"How Leveraged Mutual Funds Can Be Vicious Trading Weapons"},"content":{"rendered":"<p><img decoding=\"async\" class=\"float_right\" src=\"http:\/\/static.businessinsider.com\/image\/4adee01f0000000000f513a5-400-\/gold-ak47.png\" border=\"0\" alt=\"gold AK47\" width=\"400\" \/><\/p>\n<p><a href=\"http:\/\/marketsci.wordpress.com\/2009\/03\/09\/faq-why-i-trade-leveraged-mutual-funds\/\"><\/p>\n<div style=\"float: left; padding: 15px 15px 15px 0;\">\n<script type=\"text\/javascript\">\/\/ <![CDATA[\ntweetmeme_source = 'moneygame'; tweetmeme_service = 'bit.ly';\n\/\/ ]]><\/script><br \/>\n<script src=\"http:\/\/tweetmeme.com\/i\/scripts\/button.js\" type=\"text\/javascript\"><\/script>\n<\/div>\n<p>MarketSci Blog<\/a> gives five reasons why leveraged mutual funds are his &#8216;weapon of choice&#8217;.<\/p>\n<p>Note leveraged mutual funds aren&#8217;t the same as leveraged ETFs &#8212; they&#8217;re basically like regular mutual funds, with once a day end-of-day pricing, but use leverage.<\/p>\n<p>The five:<\/p>\n<p><strong>#1 They track their index very well:<\/strong> &#8220;because these funds (unlike ETFs) track the underlying index so closely, I can designed my strategies using index data (such as from the S&amp;P 500) rather than a specific fund. This is important because more data means a potentially more robust solution.&#8221;<\/p>\n<p><strong>#2 They don&#8217;t have per-trade transaction costs:<\/strong> &#8220;many of the advantages we trade are so small, that trading friction (i.e. execution costs and slippage) would effectively kill them. Having no per-trade costs means that we can pursue short-term swing trades that might not be available to other traders.&#8221;<\/p>\n<p><strong>#3 They can scale well for different amounts of money: <\/strong>&#8220;Another advantage of no per-trade transaction costs is that every account we manage achieves more or less the same results regardless of account size. The young investor placing $25k gets the same benefit as the financial advisor placing $25m. Call me a softie, but to me that just seems right.&#8221;<\/p>\n<p><strong>#4 They are leveraged to their benchmark index returns:<\/strong> &#8220;during those less-common times where our models believe a real competitive advantage exists, I want to be able to throw leverage at that day to maximize the impact on the portfolio.&#8221;<\/p>\n<p><strong>#5 They are priced only once a day, so are &#8216;Fire and Forget&#8217;:<\/strong> &#8220;I spend very little time actually trading (about 10 minutes a day to be exact). Leveraged mutual funds work well for me because I can make my trades, walk away, and do something more fun than wondering where the next tick on the market is going.&#8221;<\/p>\n<p><a href=\"http:\/\/marketsci.wordpress.com\/2009\/03\/09\/faq-why-i-trade-leveraged-mutual-funds\/\">Read the full post over at MarketSci &gt;<\/a><\/p>\n<p><a href=\"http:\/\/www.businessinsider.com\/leveraged-mutual-funds-are-the-ultimate-trading-weapons-2010-1#comments\">Join the conversation about this story &#187;<\/a><\/p>\n<p><b>See Also:<\/b><\/p>\n<ul>\n<li><a href=\"http:\/\/www.businessinsider.com\/how-quant-traders-make-millions-trading-around-us-holidays-2010-1\">How Quant Traders Use American Holidays To Make Millions Trading The S&amp;P500<\/a><\/li>\n<li><a href=\"http:\/\/www.businessinsider.com\/computers-dominate-at-chess-why-not-trading-2010-1\">ROBOTS: They Kick Our Ass At Chess, And Next It&#8217;s Trading<\/a><\/li>\n<li><a href=\"http:\/\/www.businessinsider.com\/citi-the-cost-cutting-recovery-is-over-but-leverage-will-drive-us-forward-2009-12\">Citi: Cost Cutting Is Over, Now Leverage Will Drive Earnings<\/a><\/li>\n<\/ul>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~r\/TheMoneyGame\/~4\/_YRqYNI3w-w\" height=\"1\" width=\"1\"\/><\/p>\n","protected":false},"excerpt":{"rendered":"<p>MarketSci Blog gives five reasons why leveraged mutual funds are his &#8216;weapon of choice&#8217;. Note leveraged mutual funds aren&#8217;t the same as leveraged ETFs &#8212; they&#8217;re basically like regular mutual funds, with once a day end-of-day pricing, but use leverage. The five: #1 They track their index very well: &#8220;because these funds (unlike ETFs) track [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-184952","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/184952","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=184952"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/184952\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=184952"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=184952"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=184952"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}