Six portfolios exceed 100% return, with APYs between 9.2% and 10.6%.
There is no doubt that 2024 has been a very good year for the stock markets.
This has helped several of our portfolios outperform 100% since inception (2017) in recent months. There are 5 Euro index fund portfolios and one Dollar ETF portfolio that have done so, in total 6 portfolios:
- Index Fund portfolios (under 5k):
– Perfil 8: 101,2%
– Profile 9: 120%
– Profile 10: 123,1%
- SRI Index Fund portfolios (under 5k):
– Profile 9: 106,7%
– Profile 10: 112,7%
- Dollar ETF Portfolio:
– Profile 10: 107,1%
CAGR at the end of November 2024 were between 9.2% and 10.6%, certainly spectacular. The cumulative returns this year to date have helped this performance, ranging from 15.9% to 25.7%. Undoubtedly exceptional returns.
The returns of these portfolios exceed by 3 to 4 percentage points the expected long-term returns, which range between 6.1% and 6.8% for these profiles.
The higher the profitability, the higher the risk
The returns in hindsight and when things are going well are certainly a joy. In the course of their history, these portfolios have gone through their share of risk. Let us remember that profitability is not the only relevant parameter for our investments. As can be seen, these portfolios have historical volatilities (volatility is an indicator of risk) certainly high between 12.1% to 15.6%, although they are generally within the expected parameters.
Perhaps the most significant thing to note in this case is that these portfolios experienced very significant declines, ranging from 27.9% to 33.9% in the Covid-19 period in March 2020. An investor who had placed €100,000 on January 1, 2017, would today have between €201,000 and €222,000 in these portfolios, this is undoubtedly spectacularly positive. But do not forget that in the middle of the bear market of the health crisis (3 years later) it was in negative between -6% and -8%.
But this is not the hardest thing to overcome, if this investor had invested in mid-February 2020 the same 100,000 Euros, he would have seen his portfolio fall to 67,000 Euros (a 33% maximum fall) in a few days. This may not be a problem if our horizon is long: as we have seen, these portfolios have also recovered strongly since that low. But it is if our horizon/target is short.
Despite having gone through these historically significant declines, the Sharpe ratio of these portfolios are actually very good, with a maximum of up to 0.77. This indicator shows that these portfolios have generated a risk-adjusted return well above the market average.
Match your portfolios to your objectives
We are proud that our portfolios not only achieve historical returns, but also serve to meet our clients’ objectives. Tailoring portfolios to each client’s profile and objectives is key to achieving optimal results in each time frame. And that means sometimes giving up high returns when we cannot take risks (for example for an emergency fund), but also knowing that we can take more risks when our objective is very long term if we are aware that we accept that higher volatility including falls of up to 35% as in the case of these portfolios that have beaten 100% returns.
Our commitment is to accompany our clients at every stage of their financial life, helping them to make informed decisions to achieve their goals, whatever their risk profile.
