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Author: jbking Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 81641  
Subject: Re: leveraged index funds Date: 11/16/2001 4:49 PM
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Greetings jjjoe,

I am thinking about starting a Roth IRA and using an index fund based on the S&P 500. Does anyone know what a fund leveraged at 150% has or doesn't have that a fund leveraged at 200% has or doesn't have.

Let's call the 150% leveraged fund A and the 200% leveraged fund B. Now, to go broke assuming leverage works in reality as it does in theory fund A needs to have the index decline 75% while fund B needs only a 50% decline. Of course on the upside, the 200% goes a bit further in theory.

I am a little in the dark about the whole leverage thing in general. any input would be appreciated.

Then check out this thread on the Index Funds board that I think covers things pretty well:

http://news.morningstar.com/doc/article/0,1,2768,00.html has some other notes on Leveraged Funds although it may require free registration at Morningstar's site.

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