Summary

• If leverage is the villain in every cautionary tale, why have institutions been quietly using it for forty years to make portfolios safer?
• There’s a real difference between using leverage to amplify one bet and using leverage to add a diversifier on top of an existing one.
• Effective April 30, 2026, Morningstar renamed the old "Multi-Asset Leveraged" category to Multi-Asset Overlay. The rationale, in their framing, is to distinguish funds that use derivatives or return stacking (layering alternatives on top of stocks and bonds) from the 2x and 3x daily leveraged crowd.

Originally published on May 18, 2026

We’ve all heard the lectures. Leverage caused the GFC. Leverage blew up Long-Term Capital Management in ’98. Leverage cratered Amaranth on a bad natural gas trade in ’06. The word itself carries decades of

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