I'm also running 55 UPRO/45 TMF in my Roth IRA, but I'd like to add a disclaimer here to note that leveraged risk parity strategies generally get their bonus from decreasing interest rates on the bond side and better risk adjusted returns from the diversification and rebalancing.
Whoever is implementing these strategies should also understand how daily rebalanced leveraged funds like UPRO and TMF work, rebalancing, and their tax implications in taxable vs non-taxable accounts.
These strategies generally perform well in up trending or downtrending markets vs. 100% stocks, but would not perform well in long term sideways markets(we haven't seen this in our history, but it could happen).
In periods of stagnant interest rates, the strategy experiences downside from from fees. NTSX will not be impacted by this as much as the fee for that ETF is 0.02%, but UPRO/TMF will lose 2% a year in these regimes.
In rising interest rate regimes, these strategies are even more impacted as rising interest rates will decrease the value on the bond side. If the federal interest rates are increasing during a period of stagflation, you will see very significant downside. What this strategy is doing is betting that the US won't run into a period of stagflation where both bond and stocks will drop at the same time. We are currently seeing a period of stagflation in Germany right now and if that were to happen here in the US, this investment strategy would perform poorly.
What I've posted is for informational purposes only, you should not construe any such information as investment, financial, or other advice.
Whoever is implementing these strategies should also understand how daily rebalanced leveraged funds like UPRO and TMF work, rebalancing, and their tax implications in taxable vs non-taxable accounts.
These strategies generally perform well in up trending or downtrending markets vs. 100% stocks, but would not perform well in long term sideways markets(we haven't seen this in our history, but it could happen).
In periods of stagnant interest rates, the strategy experiences downside from from fees. NTSX will not be impacted by this as much as the fee for that ETF is 0.02%, but UPRO/TMF will lose 2% a year in these regimes.
In rising interest rate regimes, these strategies are even more impacted as rising interest rates will decrease the value on the bond side. If the federal interest rates are increasing during a period of stagflation, you will see very significant downside. What this strategy is doing is betting that the US won't run into a period of stagflation where both bond and stocks will drop at the same time. We are currently seeing a period of stagflation in Germany right now and if that were to happen here in the US, this investment strategy would perform poorly.
What I've posted is for informational purposes only, you should not construe any such information as investment, financial, or other advice.