Using leverage with a low volatility portfolio

I saw a post on an effective altruism forum that really amazed me. It's so simple, but I just never thought about it as a newbie investor. His idea for investing long-term was essentially DCAing into the global market portfolio* with a 2x leverage. The GMP had half the volatility and half the max drawdown of the S&P500, whilst returning just 0.5% less annually. So theoretically, with a 2x lever (excluding cost of borrowing), you could make much larger returns by investing with leverage in the GMP.

On average, I think it would have worked out to be around 20% CAGR before fees. I'm guessing HFs can't utilise this because they can't borrow money, but why don't more retail investors make use of it? 

Of course returns like this are probably less achievable looking forward due to bond rates, especially when stocks are still performing amazingly, but I'm sure it could still outperform.

*the GMP replicates the global market portfolio, resulting in a low volatility (as certain asset classes have very little/inverse correlation, leading to huge diversification). Theoretically (I think? Pls correct if wrong), it means as long as global GDP grows, this portfolio grows.

2 Comments
 

Ut iusto veritatis praesentium voluptas. Odit in et nihil voluptatem vel. Eos repellendus qui expedita laborum ex sunt error. Beatae hic ut ut autem magni.

Career Advancement Opportunities

June 2026 Investment Banking

  • Evercore 01 99.4%
  • Moelis & Company 01 98.8%
  • JPMorgan 01 98.2%
  • Guggenheim Partners 01 97.7%
  • Morgan Stanley 07 97.1%

Overall Employee Satisfaction

June 2026 Investment Banking

  • Moelis & Company No 99.4%
  • Morgan Stanley 01 98.8%
  • Evercore 01 98.2%
  • BMO Capital Markets 12 97.6%
  • Banco Santander 01 97.1%

Professional Growth Opportunities

June 2026 Investment Banking

  • Moelis & Company No 99.4%
  • Evercore No 98.8%
  • Morgan Stanley 05 98.2%
  • JPMorgan No 97.7%
  • BMO Capital Markets 12 97.1%

Total Avg Compensation

June 2026 Investment Banking

  • Vice President (14) $434
  • Associates (43) $259
  • 3rd+ Year Analyst (8) $210
  • 2nd Year Analyst (22) $179
  • Intern/Summer Associate (13) $156
  • 1st Year Analyst (75) $151
  • Intern/Summer Analyst (68) $101
notes
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”

Leaderboard

1
redever's picture
redever
99.2
2
kanon's picture
kanon
99.0
3
Secyh62's picture
Secyh62
99.0
4
BankonBanking's picture
BankonBanking
99.0
5
DrApeman's picture
DrApeman
98.9
6
CompBanker's picture
CompBanker
98.9
7
dosk17's picture
dosk17
98.9
8
Betsy Massar's picture
Betsy Massar
98.9
9
GameTheory's picture
GameTheory
98.9
10
numi's picture
numi
98.8
success
From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”