HEFA
iShares Currency Hedged MSCI EAFE ETF
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Here’s the clean compare. Conventional jet is cheap: roughly $2–$3/gal in recent data (Europe’s 2024 reference sits near $2.3/gal). Public techno-economic work for ethanol-to-jet (ETJ/ATJ) puts a plant-gate minimum selling price in the mid-$3s per GGE in a base case, rising into the $4–$5.5/GGE range if you require green hydrogen, cleaner power, or extra carbon handling. In the real market, bio-SAF sold in Europe (a basket that includes HEFA and ATJ) has averaged about $6–$7/gal, while eSAF/PtL is far higher (around the mid-$20s/gal). So on pure cost: fossil jet \~$2–$3, ETJ TEA mid-$3s→$5s pre-policy, HEFA/bio-SAF market \~$6–$7, eSAF much higher. What closes the gap are mandates and credits, not wishful thinking. In the U.S., 45Z can add up to $1.75/gal for qualifying SAF based on its certified carbon intensity, and state programs can stack on top; in Europe, rising blend mandates and compliance math force buyers to source SAF or pay penalties. Co-location with an operating ethanol plant and CCS is about driving a lower CI score so those credits actually land. Whether a specific ETJ project is profitable with the loan then comes down to boring math: its verified CI (which sets credits), its true plant cost (feedstock, utilities, capex/financing), and its contracted selling price. No forecasts here, just the levers that decide if the delta pencils...
HEFA is up 15.54% YTD. VOO is up 14.48%. There are multiple cycles before 2009 where international stocks outperformed. You haven't established that all of them wouldn't have happened without currency changes. Period.
I think you've got that backwards. A currency hedged international ETF (like HEFA or DBEF) will do better with a strong/strengthening dollar and worse with a weak/weakening dollar. If the dollar is weakening compared to foreign currencies, an unhedged international ETF (like VEU or VXUS) will do better by comparison.
You can see some of the strong dollar effect by comparing EFA vs HEFA.
Keep in mind leveraged stocks+bonds get destroyed when they decide to correlate. E.g. HEFA
I’m thinking of reallocating from VEU to HEFA for my international allocation. It hedges out currency risk, and explains almost all the under performance interestingly enough.
> What are the disadvantages of investing in TQQQ instead of QQQ The disadvantages are higher management fees than QQQ. Higher volatility decay than QQQ borrowing costs eating into the NAV larger potential for behavioral issues from investors due to leverage > If you’re expecting QQQ to be higher in 20 years compared to right now, doesn’t it make more sense to invest in TQQQ instead? not necessarily, no. if you know what the standard deviation of QQQ will be over the next 20 years, what the returns of QQQ will be, and what the interest rates will average then you can determine if it would be a good deal or not. Those three items, along with the expense ratio of the funds determine your return on TQQQ. If any of those are particularly high during your investment period, you'll have poorer returns compared to, what you might expect given the leveraged ratio and even compared to the underlying fund. I found this link from /u/modern_football on exactly this. I would encourage you to thoroughly read pretty much all of this man's threads on the topic as they are very good. I'd also encourage you to read the prospectus of the fund too and pay particular attention to the volatility vs returns table in the prospectus. From my own personal experience running a leveraged portfolio using TMF/TQQQ/UPRO (pretty much HEFA) I would have been better off sticking with the underlying - as I've only made 14% in total since June of 2020, in large part due to TMF but I knew that was a risk. However, this means I've lost about 34%+ in total returns as a result of using this portfolio and keeping with it compared to simply buying VOO. https://www.reddit.com/r/LETFs/comments/snc5a1/on_the_relationship_between_qqq_and_tqqq_returns/
No one can tell you what you should do. I'd focus on VOO now but if you want international exposure for whatever reason, I would avoid VXUS since it is too heavily China. Consider HEFA and others.
Oh interesting. I recall reading up on HEFA on one of those subs. Found it fascinating and was close to commiting but ultimately felt better to just buy UPRO, DCA annually in my TFSA and sell covered calls/buy more UPRO...So far/so good. I am getting creamed on my ARKK holdings and Chinese tech which have underperformed big cap US tech for a while now...
HEFA was always going to do bad under current conditions (high inflation). People have known this for years.
I have several accounts with fideity and an M1 account with a HEFA strategy. Rebalancing in fidelity is entirely manual and agonizing. Calculate what I need to sell and what to buy. Then execute all of the sales and purchases manually. Rebalancing and maintaining a target allocation in M1 is so much easier. With M1, you can rebalance with the click of a button. They will automatically sell some assets and buy others to bring you back to 55/45. You can do it anytime. Also, anytime you deposit new money to the account, they will make the purchases to bring you back to your target allocation. For example, if you are underweight in UPRO, then more of your new money will go into UPRO automatically without you having to think about it. Unfortunately I cannot comment on their backdoor Roth. I’d highly recommend M1 for a HEFA strategy just for the ease of rebalancing and distributing new money.
Here's what discouraged me from LEAPS: * You not only have to the get the direction correct, you have time working against you. * Capital intensive * What do they offer that isn't achieved with futures if you want leverage? * What do they offer that isn't achieved with leveraged ETFs? * More stressful because of the swings unless you're living life in a k-hole. Head over to r/LETF and read up on HEFA. I do a mHFEA in some accounts, and I just use PSLDX in my retirement. It's leveraged 2:1 with a .6% ER. No stress.
I think this is exactly the expectation one needs to have in a public forum: lots of non-constructive discussions around stuff no one controls, but then every now and then I find REALLY interesting OG posts, comments, etc. For those alone, it is worth it for me. Recently discovered HEFA/Leveraged ETF, went to to boogleheads forum, and created few ideas for myself going forward with my investments.
I am gonna get downvoted probably but I'd try HEFA (55/45 UPRO/TMF) and hope 70s never come back
can you elaborate? The HEFA crowd is so bullish on tqqq and i hold both tqqq and upro but was considering rebalancing for 2022.
I'm doing an EU version of HEFA. 50% SSO, 40% TLT, 10% TQQQ. [https://www.optimizedportfolio.com/hedgefundie-adventure/](https://www.optimizedportfolio.com/hedgefundie-adventure/)
HEFA *is* literally free lunch. The point of including TMF is that you leverage your returns, **but** keep nominal risk similar to that of the S&P500
If you buy a US traded ETF, like EWY or EWN, you get exposure to the foreign market and usually the foreign currency. The value of that ETF in dollars will not be directly affected by the US market. I'm saying "directly" because the global markets often move in reaction to each other. Most non-US market ETFs are unhedged, meaning you get the currency exposure too. There are some ETF's that hedge the foreign currency exposure back into USD so you only have the effects of their equity market and not their currency market. HEFA is one example. That's useful for times when you think the foreign currency will tank vs the dollar while their equity market may rise in local currency terms.
Other note is that there are a higher percentage of up days than down days market wide. SnP goes up 53% of trading days and down only 47% of them. Coupled with the standard SnP annual growth rate, not only do you have more up days than down days, your have bigger gains on up days then losses on down days. The trick becomes finding something to invest in along side them that is negatively correlated but also has growth potential to become a sort of store for gains/slush fund for dips. This is why HEFA pairs UPRO with TMF and annual rebalancing (55/45 respectively as of last update, with several variants). Disclaimer: I do run HEFA with a significant portion of my portfolio. I run a variant that goes 45/30/25 in the HEFA portion with TMF/UPRO/TQQQ. I supplement that with a smaller account that I currently run TGIF/WKLY/GAIN/MAIN for weekly and mid/end month dividends to provide for DCA smoothing of my HEFA pie if I can’t tuck away portions of my paycheck at any given time.)