The Best Way To Hedge Your Portfolio With Leveraged ETFs

npatel81
Nov 23, 2013
1 min read

http://seekingalpha.com/article/1859101-the-best-way-to-hedge-your-portfolio-with-leveraged-etfs?source=feed By Fred Piard:

I wrote recently that timed-hedging was a good solution to protect a dividend portfolio. Sophisticated investors may prefer hedging with options, but for most people ETFs are an easier way. My previous article (read here) gave the example of a dividend portfolio hedged by a short position in SPY when the aggregate EPS estimate of S&P 500 companies for the current year is below its value 3 months ago. This solution is neither perfect, nor unique. You can choose a different hedging ratio and a different timing indicator. You have also various ETFs to short the S&P 500. The first table lists the most liquid ones.

Ticker

ETF Type

Position*

Size/stock portfolio*

SPY

Long 1x

Sell Short

100%

Short 1x

Buy

100%

SSO