In Singapore’s sophisticated financial environment, investors are constantly seeking ways to maximize their returns and enhance portfolio performance. One strategy that can significantly influence investment outcomes is the use of leverage. Leverage, measured through the leverage ratio, allows investors to amplify their exposure to various assets, potentially increasing both returns and risks. This article explores how leveraging, through effective management of leverage ratios, can optimize investment returns and what Singaporean investors need to consider for successful implementation. Understanding Leverage and Leverage Ratio Leverage involves using borrowed funds or financial instruments to increase the potential return on an investment. The leverage ratio is a financial metric that indicates the proportion of a portfolio’s assets that are financed through debt. It is typically calculated as: In other words, it shows how much of the portfolio’s assets are funded by borrowed money compared to the investor’s own equity. A higher leverage ratio implies more borrowed funds relative to...