I was shocked to read that the default choice for premium pension savers in Sweden (not sure what a premium saver is) who are under 55 is a 1.5X levered global equity fund. My thought is that for an individual actor such a move might make sense, but I question if the market is giving enough to allow massive numbers of people to profit from such a technique at the same time - without in some way shaking most out with a disastrous IRR. It might be a sign that people are over-reliant on market returns to provide for their future relative to increasing savings rate and similar conservative measures. The same is true of the very popular "all weather" strategies that appear to get most of their juice by leveraging fixed income– which was shown in Roy's paper to the the source of over half of CTA profits as well. How can the market allow for great multitudes of people in "leveraged" products to simultaneously get above average returns over the long run do to a simple factor, leverage.

Based on the following article it appears that the managers are looking for tactical timing techniques to help them escape "popping bubbles".





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