As a complement to the reports on the returns of our portfolios at the end of 2024, here we review the performance of the ETF portfolios in dollars.
It is also worth remembering that dollar portfolios are only suitable for investors whose economy is “dollarized” or who specifically want to have exposure to the dollar in part of their assets. In other words, returns are measured in dollars and the translation into another currency can be negative or positive depending on the movements of the exchange rate between the two currencies.
Here we will focus on the performance of Standard ETF Dollar portfolios.
The returns of dollar ETF portfolios have continued to be good throughout 2024
The year-end 2024 returns of our dollar ETF portfolios have been in line with the exceptional returns of 2024.
Portfolio returns range from 5.7% for Profile 1 to 13.1% for Profile 10. On average (profiles 1 to 10), dollar ETF portfolios have accumulated 9.7%, or 0.3 percentage points less than Euro portfolios. Expressed in Euros, dollar portfolios would have benefited from the appreciation of the latter, adding an extra return.
The returns of dollar ETF portfolios maintain superior returns over the long term.
Our investment portfolios have been designed for the medium to long term. It is in these time frames that we like to delve deeper, since it is where indexing shows its great advantages, by compounding returns (through the effect of compound interest) over time.
The cumulative returns since 2017 are truly exceptional, ranging from 28.0% to 99.7% for Profile 10. The average cumulative return is 64.7%.
In the graph above we see how the annualized return (CAGR) of the dollar portfolios ranges between 3.7% for profile 1 and 9.0% for profile 10, on average 6.3%. The average investor profile in inbestMe is 7 out of 10 and obtains an annualized return of 7.4%, above the 6.2% obtained in the indexed portfolios (or 5.4% in the ETF portfolio).
On other occasions we have commented that dollar ETF portfolios have generally obtained a higher return, this difference being, although general, relatively more important in low profiles. But they are also somewhat more volatile (10% on average) than Euro portfolios (8% on average). If we compare the risk-corrected returns in Euros and Dollars, these are equal.
