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My Leveraged Multi-Portfolio Strategy Breakdown

· 6 min read
Wesley Phillips
Wesley Phillips
Systems Thinker & Builder
Claude
Claude
AI Writing Assistant

This is the technical breakdown of my multi-portfolio investment strategy. For the story behind why I built this and my approach to thinking about it, check out Building a Strategic Portfolio System as a New Parent.

This post covers the specific allocations, exposures, rebalancing mechanics, and backtest results.

The Four-Portfolio System​

I manage our household wealth across four portfolios that work together as a single holistic system:

  • Alpha Investing Core: 30%
  • Nicola Core: 40%
  • World Custom: 20%
  • Cash: 10%

Quick note: I do also have a small trading account where I actively trade with money I'm okay losing. That's completely separate from this structure and I might write about that approach in a future post. This post is about our core passive portfolio strategy.

Alpha Portfolio Details​

The Alpha portfolio (30% of total household wealth) is where I use leverage and alternative assets. Even though I call it "Alpha," this is a passive strategy. I'm not actively trading or timing the market. I developed a rules-based allocation that I hold and rebalance systematically.

Within the 30% Alpha allocation:

  • UPRO (3x S&P 500): 90% of the Alpha portfolio
  • VOO (S&P 500): 20% of the Alpha portfolio
  • TLT (Long-duration bonds): 10%
  • IBIT (Bitcoin ETF): 25%
  • UGL (2x Gold): 30%

Yeah, those percentages add up to more than 100%. That's the leverage working.

Alpha Portfolio Exposures​

In terms of total household portfolio exposure, this 30% slice gives us:

  • US Large Cap: 33% (27% from UPRO + 6% from VOO)
  • Long-Duration Bonds: 3%
  • Bitcoin: 7.5%
  • Gold: 9%

Nicola Core Details​

The Nicola Core is the stability engine at 40% of our household wealth. These are Nicola portfolios that we access through CI Direct's balanced private portfolio (split between Inwu and me). Normally, Nicola requires a $1 million buy-in, but CI Direct provides access through their balanced private portfolio, which I really appreciate. It's a great portfolio with a slightly higher fee than using Nicola directly, but still worth it.

The portfolios are conservatively allocated across:

  • US Equity: ~20%
  • International Equity: ~20%
  • Fixed Income: ~35%
  • Real Estate: ~30%
  • Private Equity: ~10%

Nicola Core Exposures​

At the 40% portfolio weight, this gives us:

  • US Equity: ~8% total portfolio
  • International Equity: ~8%
  • Fixed Income: ~14%
  • Real Estate: ~12%
  • Private Equity: ~4%

World Custom Details​

The World Custom portfolio at 20% gives us exposure to markets and assets that neither of the other portfolios fully covers:

  • IEFA (International Developed): 20%
  • EEMV (Emerging Markets Value): 15%
  • ACWV (Global Minimum Volatility): 15%
  • QCN (Canadian Equity): 10%
  • ZFL (Canadian Long-Duration Bonds): 15%
  • ZAG (Canadian Aggregate Bonds): 7%
  • GLDM (Gold): 15%
  • XSH (Short-Term Credit): 3%

Total Household Exposures​

When you roll it all up across the four portfolios, our total household exposure looks like this:

  • US Large Cap: ~41%
  • International/EM: ~15%
  • Fixed Income: ~21%
  • Gold: 12%
  • Real Estate: ~12%
  • Bitcoin: 7.5%
  • Cash: 10%

You'll notice these add up to more than 100%. That's the leverage in the Alpha portfolio at work. We're using about 1.2x leverage at the total portfolio level: aggressive enough to potentially boost returns, conservative enough to sleep at night.

The Rebalancing System​

I built an Excel spreadsheet to track all of this and handle the rebalancing. Every month, the sheet calculates the current value of each portfolio, the actual allocation percentages versus the targets, and how much each portfolio has drifted.

Monthly Rebalancing​

I use a one-twelfth partial rebalancing approach rather than full rebalancing. This means I rebalance 1/12th of the drift each month rather than completely resetting to targets. It's a bit more effort than quarterly rebalancing but still passive and follows the system.

Contribution Strategy​

When we have money to invest, I don't just split it evenly. I contribute to whichever portfolio is most underweight relative to its target:

  • If Alpha has dropped to 27% (target 30%), new money goes to Alpha
  • If World Custom has drifted to 22% (target 20%), new money goes elsewhere

The system naturally buys low and sells high through contribution patterns.

Annual Review​

Once a year, I review the portfolio-level allocations to see if we need to adjust the top-level targets (the 30/40/20/10 split) based on:

  • Life changes (income, expenses, risk tolerance)
  • Performance and drawdown analysis
  • Shifts in asset correlations

Backtest Results​

I backtested this strategy using Portfolio Visualizer and ran multiple historical scenarios.

Alpha Portfolio Drawdowns​

When I ran simulations on the Alpha portfolio with its leverage and concentrated alternative bets, I saw significant drawdowns in historical stress scenarios, with 40%+ declines in bad markets. If that were my entire portfolio, I'd never sleep.

Total Portfolio Drawdowns​

But it's only 30% of our total allocation. When you look at the whole portfolio, those drawdowns get substantially muted:

  • The Nicola Core portfolio's conservative allocations provide stability
  • The World Custom portfolio offers diversification
  • Cash acts as a shock absorber
  • Monthly rebalancing means we buy into Alpha positions after they've dropped

Over the long run (and we're talking 20+ year time horizon here), the backtests showed that the leveraged Alpha exposure added meaningful returns while the portfolio-level diversification kept total drawdowns within acceptable ranges.

The system works because we're not going all-in on leverage. We're using it strategically in one portfolio while maintaining balance across the whole.

Risk Considerations​

The Excel system removes emotion from the process. The math tells us where to contribute. We don't have to guess or time the market. And if life changes (job loss, health issues, different risk tolerance), we can adjust the top-level allocations annually without changing the underlying strategy.

Leverage Warnings​

Using 3x leveraged ETFs means you can lose money fast in volatile markets. Using 2x gold means you're amplifying an already volatile asset. You need:

  • Strong stomach for drawdowns
  • Long time horizon (20+ years)
  • Emergency fund outside the portfolio
  • Willingness to stick with the strategy through pain

I'm using leverage in 30% of the portfolio because I believe the long-term expected returns justify the risk, and because the other 70% provides enough stability that we can ride out the storms. Obviously my risk profile is higher than most, so note that too.

If you're considering leverage, backtest it. Understand the drawdowns. Make sure you can actually stick with it when your account is down 35% and everyone is panicking.

This is not financial advice. This is my personal strategy based on my specific situation, risk tolerance, and time horizon. Your situation is different. Do your own research, understand the risks, and consider working with a financial advisor.

For questions about the philosophy and journey behind this strategy, see Building a Strategic Portfolio System as a New Parent.