Could leverage benefit your investment portfolio?

While almost everyone uses leverage in their daily lives, its prevalence within institutional investment portfolios is sparse, outside of specific strategies. Recently, more institutional investors have been considering the use of leverage, with a goal of increasing their investment returns. The pension giant CalPERS made a number of portfolio modifications, including adding 5% leverage across its allocation to support its expected return target rate of 6.8%.

Using leverage with the objective of increasing investment returns may be an option for a variety of investors, but carries its own risks and should be done with careful consideration of the related trade offs. Could this investment alternative benefit you?

In this paper, we cover:

• What we mean by portfolio leverage
• The role of leverage in your portfolio
• The potential benefits and risks of leverage

Information provided by SEI Investments Management Corporation (SIMC), a registered investment adviser and wholly owned subsidiary of SEI Investments Company.

Investing involves risk including possible loss of principal. There can be no assurance goals will be met nor that risk can be managed successfully.