We have talked previously about how leverage can be used defensively.
DBS Bank has also illustrated how we can use a leverage account to boost returns. (Note, we don’t borrow more than $1 per every $1 we have to. This is to control the risk of being margin-called, which can destroy up to 60% of your capital.)
Not sponsored. You are advised to shop around for the best rates on leverage.
Occasionally, investors with a leveraged account can exploit special situations and participate in a unique market opportunity that can lower the investment risk of their portfolios dramatically.
This can potentially reduce the downside risk of a portfolio of REITs even though such risks are already below that of an equivalent equity portfolio that consists of non-REIT counters.
One such opportunity arose recently when Ascendas Hospitality Trust declared that they will be attempting to merge with Ascott Reit.
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