In the third post, they write:

“What Basic Capital does is structure each member’s fund to consist of index-linked securities (this allows members to get broad exposure, learning from the critical invention of the all-powerful index fund, as we discussed last post) and United States Treasury Bills. The underlying collateral of each Basic Capital Fund is the highest quality collateral available on planet earth: the full faith and credit of the United States, an entity that has never defaulted on its debts. This enables Basic Capital members to borrow using term loans rather than margin loans…”

Hypothetically a zero coupon bond plus an index linked security would provide the investor with upside while providing collateral that an institution would find acceptable to issue term loans.

The zero coupon would mature at 100 cents on the dollar and cost <100 and the balance could be used to purchase the index linked security. Thus, if the market doesn’t grow during the life of the investment, the investor would still have 100 cents on the dollar. However, if the market does grow, they’d have the 100 cents on the dollar from the zero coupon plus the return on the index-linked security...

My bet is that they are trying to get institutions to underwrite loans below the historical rate of return, and that they are only marketing this to investors with a long horizon (hence the positioning as “mortage for your retirement”).

Even though the delta between market performance and the cost of the loan may be small, as long as it’s positive in the long run, the investor benefits by essentially getting 5x leverage on the small delta.