We launch Target Portfolios in EUR and USD

In line with our objective of offering the best solutions to our clients to achieve their financial objectives and cover all their financial needs, we announce the launch of target portfolios in two currencies and starting at €5,000/$ with the following options:

• Target portfolios in Euro with ETFs (expirations 12/2025, 12/2026, 12/2027)
• Target portfolios in Euro with funds (expiration 4/2026) only contractable until October 2024 and only available for tax residents in Spain.
• Target portfolios in Dollar with ETFs (expirations 12/2025, 12/2026, 12/2027).

Target portfolios have great advantages such as an attractive cumulative target return target of up to 12%/20%* (3.2%/5.1% annualized*) at a target date, with a high degree of certainty. due to its great diversification (although not guaranteed) and with more flexibility and operational and fiscal efficiency than the direct purchase of bonds or treasury bills.

*in Euros or Dollars respectively.

Target portfolios in euros (with ETFs) with target cumulative profitability up to 12% net

The table above shows the complete offer of our target portfolios (with ETFs) in Euros with three maturities 12/2025, 12/2026, 12/2027.

With these portfolios, the inbestMe client who can invest with a time horizon beyond one year can have a goal of cumulative target returns (net of all commissions) of 5.8%, 8.8% or 12.1% respectively with an annualized target return of around 3.2% or 3.7% gross. This can rise to 3.3% for amounts above 5 million.

Important note: the calculation of the cumulative target profitability has been made by composing as of 4/1/2024 the annualized target profitability of each target portfolio for the period until maturity for each maturity.

For example for 12/2027:

(1+ Annualized Target Return) ^years = (1+3.1%)^3.7=12.1%

The accumulated target profitability will be reduced depending on the time of contract (we will update at least once a month). The annualized target return may also vary over the life of the portfolio, but it is expected to vary relatively little. In the annex at the end of this article we offer a complete table with all the data.

Target portfolios (and in general target return funds) are designed to be held until maturity (12/2025, 12/2026, 12/2027) and although they can be liquidated at any time before maturity, they may have fluctuations and even lose capital at some point in your life. If you are not sure you can maintain them until the goal, consider investing in a savings portfolio. In any case, inbestMe does not apply any penalty or additional cost for closing the portfolio before expiration.

It is also important to emphasize that a target return is not a guaranteed return: as its name indicates, it is the target return that will be met with great certainty if there are no losses on the bonds that comprise it.

Compared to a deposit, the purchase of a bond or treasury bills, inbestMe’s target portfolios have much more diversification and greater operational and fiscal flexibility.

Target Portfolio in Euros (with funds) with target cumulative return of 7.6% net

For a few months now, the inbestMe investment committee has been alert to see opportunities in the new fixed income target profitability funds that appear since the offer is often unprofitable, limited and not very flexible in terms of maturities, as we discussed here.

But as a result of this monitoring, we are pleased to announce that we also launched the 4/2026 target portfolio with investment funds with a cumulative target return of 7.6% net of commissions with a net annualized target return of 3.7% (4.4% gross). In the case of applying the minimum commissions (above 5 million) the accumulated target return would be 8.0% or 3.9% annualized.

The portfolio is made up of an M&G fund (M&G lux Fixed Maturity Bond Fund1 LU2732958959) with a target return and target date of April 2026. It is an active fund (an exception in our offer) that has between 50/60 corporate bonds. Its annualized target return is 0.5% (3.7% vs. 3.2%) higher than the ETF version. Its degree of diversification is less than the ETFs made up of Black Rock iBonds (which have 375 and 425 bonds in Euro or dollars respectively, see more information below).

The credit quality of the M&G fund is somewhat more aggressive than that of the iBonds and may have, according to the manager, between 10% to 20% “High Yield”. The manager’s objective is that this does not affect possible losses and that the fund’s target profitability, 4.5% in gross terms, is met. The fund is article 8 according to SFDR, therefore, it takes into account sustainability characteristics.

In the 4/2026 target portfolio, the M&G fund has a weight of 80% and is combined with 20% of one of the monetary funds that we already use in the savings portfolios to obtain a little more diversification and adjust the risk a little more total portfolio

Note: This distribution may be subject to change if the investment committee deems it appropriate.

In the target portfolio 4/2026, one-time contributions can only be made until October 16, 2024. For this reason, we do not accept recurring contributions. Their liquidity characteristics are similar to ETF portfolios: they can also be liquidated without penalty at any time.

Important note: target portfolios (and in general target return funds) are specially designed to be held until maturity and any prior liquidation is subject to losing part of the target return or even in extreme cases losing part of the capital. If we are not sure of being able to maintain the investment until maturity, it is better to hire a Savings Portfolio. It is also important to emphasize that a target return is not a guaranteed return: as its name indicates, it is the target return that will be met with great certainty if there are no failures in the bonds that comprise it. In any case, inbestMe does not apply any penalty or additional cost for closing the portfolio before expiration.

The great advantage of the 4/2026 target portfolio (only for a natural person tax resident in Spain) is that since it is made up of transferable investment funds, it can be transferred tax-free to other funds or portfolios made up of funds.

Target portfolios in dollars (with ETFs) with target cumulative profitability up to 19.7% net

For those clients who are exposed to the dollar we also offer three options: in dollars the target returns are higher because the official dollar rates are higher.

With the dollar target portfolios, the inbestMe client, the client who has dollars and can invest for over a year, can establish a goal of accumulated target returns net of all commissions of 9.2%, 14.5% and 20. 2% respectively with an annualized target return of around 5.1% (5.4% gross). This can go up to 5.2% for amounts above 5 million).

Important note: the calculation of the cumulative target profitability has been made by composing as of 4/1/2024 the annualized target profitability of each target portfolio for the period until maturity for each maturity.

For example, for 12/2027:

(1+ Annualized Target Return) ^years = (1+5%)^3.7=19.7%

The accumulated target profitability will be reduced depending on the time of contract (we will update at least once a month). The annualized target return may also vary over the life of the portfolio, but it is expected to vary relatively little. In the annex at the end of this article we offer a complete table with all the data.

Target portfolios (and in general target return funds) are designed to be held until maturity (12/2025, 12/2026, 12/2027) and although they can be liquidated at any time before maturity, they may have fluctuations and even lose capital at some point in your life. If you are not sure you can maintain them until the goal, consider investing in a savings portfolio. It is also important to emphasize that a target return is not a guaranteed return: as its name indicates, it is the target return that will be met with great certainty if there are no failures in the bonds that comprise it. In any case, inbestMe does not apply any penalty or additional cost for closing the portfolio before expiration.

It is obvious that dollar portfolios are designed for people who have the dollar as their main currency or who explicitly want to have a part of their assets exposed to the dollar. That is, for those who do not have the dollar as their main currency, if they contract a target portfolio in dollars, they are assuming additional currency exchange risk.

We also offer a promotional bonus with the same conditions for portfolios in dollars that can raise the target return to 4.6% (or 4.7% respectively).

Distribution of objective portfolios in ETFs

To build target ETF portfolios we have relied on the new offering of iBonds, which are target date bond ETFs recently launched by iShares.

Note: At inbestMe we already have experience in using target return ETFs: in our dollar-denominated portfolios for some profiles we have already made use of this type of ETFs (domiciled in the US) for the low profiles of our indexed portfolios diversified in ETF dollars adding additional profitability (see ETF portfolio reports in dollars 2023).

At the time of launch, the portfolios are built 90% with the corporate bond of each maturity (12/2025, 12/2026, 12/2027) to which 10% of an ultrashort ETF (corporate bonds) is also added from iShares that helps us expand diversification and slightly increase the target profitability of the portfolio. iShares iBonds are Article 8 under SFDR, which are funds that promote environmental or social characteristics and encourage good corporate governance practices and also exclude companies with certain activities incompatible with ESG criteria.

iShares iBonds Euro ETFs have exposure to approximately 375 investment-grade, fixed-rate, euro-denominated corporate bonds maturing between 01/01 and 12/15 of the maturity year. In the following graph we see the credit quality of the iBonds in Euro:

We see that around 47% have a BBB rating, 40% A and 12% AA.

iShares iBonds Dollar ETFs have exposure to approximately 425 euro-denominated, fixed-rate, investment-grade corporate bonds maturing between 01/01 and 12/15 of the maturity year. In the following graph we see the credit quality:

We see that around 46%/51% have a BBB “rating”, 40% A and between 8% and 12% AA.

General Operation of the Target Portfolios

The target portfolios can be contracted at any time by making a minimum initial contribution of 5,000 (€/$). We will update the accumulated and annualized target profitability for each target portfolio on our website at the beginning of each month.

The client can, as in any portfolio at inbestMe, make additional contributions or schedule monthly recurring contributions and inbestMe will rebalance the portfolio avoiding sales (so as not to generate capital gains before maturity, as long as the client does not sell). For the target portfolio 4/2026 (investment funds) contributions will only be accepted until 10/16/2024.

Important note: It is very important to highlight that although the client can liquidate and close the portfolio at any time, these portfolios are specially designed to be held until maturity. That is, the target return is estimated at maturity and only at maturity. During the life of the portfolio it may be subject to the volatility (although predictably low) of the credit markets and interest rate movements. If you withdraw before maturity, you may not only obtain annualized returns different from the target, but also lose part of your capital. Said in a more technical way, although they are liquid (they can be sold at any time) before maturity they have what is called liquidity risk, since if they are undone before maturity we can lose part of the profitability or even capital (unlikely due to its low volatility, but technically possible). In any case, inbestMe does not apply any penalty or additional cost for closing the portfolio before expiration. If a client is not sure that they will be able to maintain the capital until maturity, it is better to contract a shorter maturity or opt for the savings portfolio where the volatility is close to zero.

A few weeks before expiration, we will offer the client the option to make adjustments, either just before this date or at the time of liquidation of the fund, which will occur a few days later. Likewise, the client may choose to transfer their investment to a future target portfolio or to a different type of portfolio. On the selected date, the client will have the possibility of transferring the total capital together with the accumulated returns, or a different amount; For example, you could transfer just the initial capital and put the proceeds into your checking account, using the target portfolio to generate annual income. By default, if the client does not specify their preference, inbestMe will wait until the fund is liquidated and will automatically convert the portfolio distribution to the Savings Portfolio on the maturity date, until the client chooses another alternative.

These accounts are more operationally and fiscally efficient than deposits and treasury bills, since returns accumulate until maturity and no capital gains taxes are withheld. In the case of the 4/2026 target portfolio, the funds can also be transferred to another portfolio or transferable funds, deferring taxation. Settlement for iBonds is made during the first days of the following year, delaying the potential tax payment (for example, 1/1/2026, for 12/2025, taxes will not be settled until June 2027, unless the client has decided otherwise in the previous point). Dividends are also not accrued and, therefore, there are no withholdings.

To manage the 4/2026 target portfolio, inbestMe opens an investment portfolio at GVC Gaesco/Allfunds Bank held in Spain and all tax information is reported to the Treasury at the end of the year, integrating it into the client’s draft.

The target portfolios have very tight commissions to maximize the net profitability of our clients according to the following table:

The TER of the 4/2026 target portfolio with investment funds is higher because the fund is active. Let us remember that the target returns that we report are already net of all these commissions.

Important note: For ETF target portfolios the Interactive Brokers (IB) account is in Ireland for EU residents (in the US for everyone else). IB does not report capital gains generated to any treasury. It is the client who must report and pay, if applicable, their taxes where they correspond. To this end, both inbestMe and Interactive Brokers issue summary reports to facilitate this process. For a tax resident in Spain and above €50,000, an individual client may be subject to reporting form 720.

inbestMe’s Target Wallets in Summary

The initiative to launch Target Portfolios, together with the extension of the bond portfolio offering, underlines inbestMe’s strategy of providing cutting-edge investment solutions, complementing its already highly diversified offering of financial products, and reaffirms its position as a leader and innovator in the automated investment portfolio management sector.

Remember that for objectives with medium or long-term horizons you may be interested in considering our portfolios of index funds or pension plans.

Annex I: How to contract a Target Portfolio

To hire a target portfolio, simply select the target portfolio option in the registration process and follow the steps. Depending on your horizon, we will recommend the target portfolio that best suits your horizon.

“Get a recommendation” and after answering a few questions we will recommend the portfolio that best fits your objectives and financial situation.

Also remember that you can open new portfolios after having contributed money to the first one, being able to completely plan your financial life in inbestMe, from short-term savings or emergency funds to your retirement.

Annex II: Complete tables with data from the Target Portfolios

In the following tables you can see expanded information for each target portfolio.

Important note: These calculations have been updated as of 4/15/2024.

Some of the data may change at later dates. It is to be expected that the annualized target returns will not vary significantly, but they will vary by tenths up or down.

The cumulative target profitability can also vary due to what has already been mentioned, but also obviously due to the reduction in time until maturity.

For target portfolios in Euros (ETFs):

For target portfolios in Euros (Funds):

For target portfolios in Dollars (ETFs):