Summary of changes to inbestMe portfolios in 2025

inbestMe follows indexed management

At inbestMe, our main service consists of delegated management of investment portfolios. Our investment committee designs portfolios with a pre-established allocation, using mostly index funds (or ETFs), based on indexed management (also called passive management or management with index funds replicating indices).

These portfolios are periodically monitored by the committee to ensure they maintain the appropriate allocation for the short-, medium-, or long-term objectives for which they were designed, aiming to maximize the risk/return relationship for different risk levels. It is important to highlight that this monitoring does not seek market timing, but normally minor and occasional adjustments to existing allocations to optimize the overall positioning with a long-term view. In general, changes are infrequent and usually fine-tuning adjustments to the pre-established allocations.

However, at key moments, these changes can be somewhat deeper. Examples of deeper changes:

• In April 2021, we anticipated significantly reducing durations in the fixed income part of all our diversified portfolios, partially protecting against the significant interest rate hike that occurred starting in 2022, reversing years of zero or negative rates.
• At the end of 2022, when interest rates became positive again, we were the first Robo Advisor to introduce money market funds into our portfolio offerings, mainly through our savings portfolio, and they also began to be part of our allocations in other portfolios.
• During 2024, we were also pioneers among automated managers by launching target-date portfolios and bond portfolios to take advantage of the new era opening for bonds and expand our portfolio offering to cover more comprehensively the different financial objectives of our clients.

In recent weeks, we have made what we consider fine adjustments in some of our portfolios. Below is a summary of these changes over recent months.

Adjustment of profile 10 to 100% equity

We have changed the asset allocation of profile 10 portfolios to be 100% equity. Before this change, profile 10 portfolios had an allocation of about 10% to bonds to maintain some diversification.

However, we detected that our clients prefer to have total equity exposure, so we decided to convert profile 10 portfolios into “100% equity portfolios” while still maintaining high diversification.

Therefore, we eliminated allocations to global bonds and inflation-linked bonds to increase exposure to the MSCI World index and achieve 100% equity exposure.

Adjustments in ISR portfolios

We have also made changes in the allocations of some ISR portfolios. Both in ETFs portfolios and indexed funds portfolios, we have reduced allocation to some impact funds. We remain committed to investing in financial assets with a positive impact on the planet.

We were the first roboadvisor to introduce indexed ISR management in Europe and Spain, and we remain convinced of its value.

However, in recent periods, we have observed excessive divergence between the performance of some impact funds and conventional indices. Therefore, for now, we have preferred to slightly reduce impact investment to reduce tracking error relative to global indices. Remember that our strategy continues to be mainly based on indexed management.

In other words, especially at a time when sustainability issues face great uncertainty in state policies, we want to reduce the possibility that our clients experience surprises in terms of performance or have to deal with excessive randomness in returns.

In some cases, therefore, we have chosen funds that retain their ESG/ISR characteristics but whose allocation deviates less from traditional indices and thus more faithfully reflect their performance.

Specifically, we have removed from the portfolios an ETF that replicates the Global Sustainable Development Goals and replaced it with an MSCI World SRI, and we have replaced a Climate Change indexed fund with an MSCI World ESG screened index in the ISR indexed funds portfolios.

Adjustments in indexed funds portfolios < €5,000

Due to recent global uncertainties regarding the role of the US dollar, we have decided to review currency risk again in all our portfolios.

This issue is especially relevant because the weight of the dollar in global indices has increased significantly in recent times. This is because the main indices are capitalization-weighted, which implies that companies with higher capitalization have more influence on the index calculation.

The extraordinary performance of US equities since the 2008 global financial crisis has allowed it to represent over 70% of the MSCI World index, compared to about 50% in 2010.

For a European investor, the EUR/USD exchange rate therefore has a significant impact on the overall performance of their portfolio. The return on an investment in dollar-denominated assets depends on two factors: the return of the foreign asset and the evolution of the dollar’s value against the euro.

It is true that, in the long term, the EUR/USD exchange rate has tended to fluctuate around its historical average, close to 1.20. However, current uncertainty and the apparent intention of the Trump administration to weaken the dollar require greater caution.

Therefore, we have decided to review the allocation of portfolios < €5,000. These portfolios have a simplified structure, and their allocation is closer to global indices and therefore have higher dollar exposure.

Part of the exposure to the MSCI World index has now been allocated to a currency-hedged fund. In exchange for an approximate cost equivalent to the interest rate differential plus TER, this type of instrument allows isolating equity behavior, preventing it from being negatively affected by unfavorable currency movements.

We consider this decision a temporary measure, and we may return to the original approach when uncertainty about international relations and US economic policy has diminished.
This decision affects both the standard indexed funds portfolios under €5,000 and the ISR version.

Remember that portfolios under €5,000 are considered transitional until reaching that threshold. Diversified portfolios of indexed funds and ETFs in euros with amounts over €5,000 are those that reflect the preferred allocation of the inbestMe investment committee and integrate from the start a partial hedging of dollar exposure.

Adjustments in the bold bond portfolio

Related to this, we have also decided to avoid dollar exposure in the bold bond portfolios by slightly modifying the allocation.

Conclusion: valuing management

With these adjustments, we highlight the management component inherent to our indexed management philosophy. We reaffirm our commitment to modern, effective indexed management adapted to the global economic and financial landscape. Although our vision is long-term and structural changes are infrequent, we consider it essential to act agilely in the face of relevant imbalances, opportunities, or risks for our clients.

These adjustments seek to optimize diversification, reduce unwanted risks —such as excess currency volatility or large deviations from benchmark indices— and continue offering portfolios aligned with each investor’s financial goals. As always, our decisions are guided by technical rigor, transparency, and the constant pursuit of the best risk/return ratio.

As always, these changes are part of our services and have no additional cost for our clients.