Levered Trade That Blew Up in 2008 Gets a $600 Million ETF Redo
- ‘Return stacking’ aims to bring ‘portable alpha’ to the masses
- For every dollar, RSST fund allows $1 in stocks plus stacking
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A leveraged strategy for diversifying investments that crashed spectacularly in the financial crisis is back. This time, the designers say they’ve ironed out the problems.
The offering, known as portable alpha since the 1980s but recently rechristened “return stacking,” has caught on in exchange-traded funds sold by Newfound Research and ReSolve Asset Management. Cash is creeping into the ETFs billed as one-stop shops for cross-asset diversification that use borrowed money and derivatives to amp up firepower.