Could someone explain to me the basic financing advantage of futures over ETFs?

[ETcallhome]

this has been discussed many times before, usually long term SPY vs ES. It is quite close, and really makes no material difference unless you are talking about large sums of money most personal investors are not moving.

Almost everybody agrees long term cash beats futures by a small margin if you are just considering cost.

Now a leveraged etf? You gotta be kiddin me (unless it's an etf which only invests in companies which make ten foot poles.)

 

[Maverick74]

I thought futures were mtm at the end of the year and tax paid regardless of it being closed or still unrealized. At the 60/40 rate.

Actually the ETF is better. After one year the ETF gets the long term capital gains rate vs the future which gets 60/40. So after 12 months you pay more taxes on the future then the ETF.

 

[bjr89]

newwurldmn -- Thanks for your help!

ETcallhome -- actually I was referring to buying ETFs on margin vs. using futures to get the same 2:1 exposure and the relative costs. It's not as simple as it seems on the surface as one would need to weigh the marginal financing advantage of futures vs. the marginal tax advantage of the ETFs in the case of long term cap gains. I appreciate your help though.

Maverick -- Thanks for clarifying your previous statement. Very helpful.

 

[ETcallhome]

newwurldmn -- Thanks for your help!

ETcallhome -- actually I was referring to buying ETFs on margin vs. using futures to get the same 2:1 exposure and the relative costs. It's not as simple as it seems on the surface as one would need to weigh the marginal financing advantage of futures vs. the marginal tax advantage of the ETFs in the case of long term cap gains. I appreciate your help though.

Maverick -- Thanks for clarifying your previous statement. Very helpful.

Like my Bubbie always said, "A healthy man you feed, to a sick man you offer."

 

[bjr89]

Like my Bubbie always said, "A healthy man you feed, to a sick man you offer."

Ha, so am I the healthy man or the sick one? What does this even mean?

If I'm wrong about something regarding my futures vs. ETF logic, I'd truly be grateful if you explained it to me.

 

[ETcallhome]

Ha, so am I the healthy man or the sick one? What does this even mean?

If I'm wrong about something regarding my futures vs. ETF logic, I'd truly be grateful if you explained it to me.

ah, mostly just having fun, I'll take some blame because when you said levereged etf I assumed you were talking about a 2x or 3x etf. It wasn't that long ago I asked the same question concerning a long term buy and hold in spy vs es. It would seem you could just put up the small margn required for es and take all the rest and put it in interest bearing cash. But as Maverick explained, it is pretty close. And then there are dividends to consider. If going in I expect to hold a year or more I would always go with the cash index, and if my strategy is shorter than that the futures. The greatest mistake I made starting out was not understanding taxes. Of course, why would I? I didn't have any profits to pay taxes on. You are wise to ask. Too many so called serious investors will not explore futures when in many cases that is just what the doctor ordered.
and speaking of serious, don't take me too serious, I just like to post when I get talkative whether I have anything to offer or not, but you if you are serious you can search the many cash vs futures debates on this very site.
Good luck, and thanks for the polite reply

 

[bjr89]

ah, mostly just having fun, I'll take some blame because when you said levereged etf I assumed you were talking about a 2x or 3x etf. It wasn't that long ago I asked the same question concerning a long term buy and hold in spy vs es. It would seem you could just put up the small margn required for es and take all the rest and put it in interest bearing cash. But as Maverick explained, it is pretty close. And then there are dividends to consider. If going in I expect to hold a year or more I would always go with the cash index, and if my strategy is shorter than that the futures. The greatest mistake I made starting out was not understanding taxes. Of course, why would I? I didn't have any profits to pay taxes on. You are wise to ask. Too many so called serious investors will not explore futures when in many cases that is just what the doctor ordered.
and speaking of serious, don't take me too serious, I just like to post when I get talkative whether I have anything to offer or not, but you if you are serious you can search the many cash vs futures debates on this very site.
Good luck, and thanks for the polite reply

Thanks ET!