Converting GLD to UGL (confirming the math)

[brucealder]

Hi Alex/Frank/Vangelis/et al.,
Due to the delisting of UGLD I’m trying to use UGL instead of GLD in UISx3 for my non-leveraged non-margin IRA account, and am trying to figure out the math to convert between the two.

When you published this for July the conversion ratio from the article was 80%. Should I use the same adjustment for the August mix? Once I know the conversion it’s easy to then figure out the remaining mix for SPXL and TMF. Is 80% always the right way to convert from GLD to UGL (or from a straight fund to a 2X fund)? If it’s not, do you mind telling me the formula to determine (and I’m sure it’s easy and I’m just missing it).

I tried to include a screenshot below to help illustrate the point.
Thank you in advance for your help!
Bruce

[brucealder]

[brucealder]

(if you right click the screenshot link, hopefully it’ll open for you)

[Frank1 Grossmann]

This month the allocation is 30% SPXL, 50% TMF and 60% GLD (= 140%)
using UGL instead of GLD is 30% SPXL, 50% TMF and 30% UGL (=110%)

You just have to divide the GLD percentage by 2 to get the UGL allocation because UGL is 2x GLD

[ikoskela]

So I’m trading the old Aggressive Risk portfolio (this isn’t the start of month allocation, its just what today was):

Symbol Weight
CHTR 8.25%
COST 8.25%
GLD 9.00%(x3.0)
GSY 24.00%
HD 3.00%
JNJ 3.00%
PEP 8.25%
PG 3.00%
SPXL 4.50%
TLT 16.00%
TMF 7.50%
VRSK 8.25%
VZ 3.00%
Total 106.00%

Are you saying that I’d simply use 4.5% UGL and then scale everything to 100% like this:
Symbol Weight Adj Weight
CHTR 8.25% 8.13%
COST 8.25% 8.13%
UGL 9%/2=4.5% 4.43%
GSY 24.00% 23.65%
HD 3.00% 2.96%
JNJ 3.00% 2.96%
PEP 8.25% 8.13%
PG 3.00% 2.96%
SPXL 4.50% 4.43%
TLT 16.00% 15.76%
TMF 7.50% 7.39%
VRSK 8.25% 8.13%
VZ 3.00% 2.96%
Total 101.50% 100.00%

Or would you do it this way:
Symbol Weight Adj Weight
CHTR 8.25% 7.47%
COST 8.25% 7.47%
UGL (9%*3)/2=13.5% 12.22%
GSY 24.00% 21.72%
HD 3.00% 2.71%
JNJ 3.00% 2.71%
PEP 8.25% 7.47%
PG 3.00% 2.71%
SPXL 4.50% 4.07%
TLT 16.00% 14.48%
TMF 7.50% 6.79%
VRSK 8.25% 7.47%
VZ 3.00% 2.71%
Total 110.50% 100.00%

I thought I knew how to re-scale and now I’m a bit unsure.

Thank you!

[Frank1 Grossmann]

Yes you simply use 4.5% UGL and then scale everything to 100%

[Author]

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