Market comment
Despite major economic uncertainties and unprecedented geopolitical tensions, equity markets have performed very well so far in 2024. US indices were the best performers. The end of the third quarter brought a significant recovery in Chinese assets, which had lagged in recent years. The move was triggered by the announcement of some new expansionary monetary measures, but even more so by the hint that the Chinese authorities would be ready to expand fiscal measures aimed at helping lower-income families and sustaining consumption.-
During 2024, global fixed income has started to show clear signs of recovery. During the last period, bonds, which rose in price in previous months as investors expected a major economic slowdown, had to adjust slightly due to a stronger-than-expected economy, especially in the US, and gave some ground.
Commodity indices are posting a slightly positive return, with very uneven performance among the various commodities, with precious metals doing very well, while energy commodities are lagging.
In relation to the commodity in which we invest in our (ETF) portfolios, gold performed very well. Central banks continue to buy a large amount of gold for their reserves, and investors are buying it as a safe haven of value in the face of the constant expansion of the monetary base by central banks.
In equities, the US continues to lead with a strong performance, although we have already mentioned the strong recovery in emerging markets thanks to the rebound in China.
On the bond side, corporate credit continues to be the best performer and outperforms government bonds. Corporates are still funding very easily as there is a lot of demand for corporate credit and spreads are at lows.
Government bonds gave up some gains made over the summer as markets began to discount a stronger economy and potentially higher inflation expectations going forward.
Performance of our indexed fund portfolios through September 2024
All of our diversified portfolios of index funds and ETFs have posted positive returns so far in 2024. Diversified portfolios are portfolios for investors who want to invest for the long term. The broad diversification they provide in terms of exposure to different asset classes helps make them resilient to most market conditions.
The performance of all Index Funds portfolios, in line with what has happened in the markets, has been exceptional and has ranged between 4.2% and 15.2% so far in 2024, with an average of 9.7%, compared to an average return of 5.8% for Spanish mutual funds as a whole, as reported by Inverco. In other words, on average, our portfolios have outperformed by 3.9 percentage points.
Performance of our ETF portfolios through September 2024
Diversified portfolios can be constructed with both index funds and ETFs. The level of risk and exposure for the corresponding profiles is similar, but the performance may be slightly different, as the availability of investment vehicles is not exactly the same.
As for ETF portfolios, the return is between 3.7% (profile 1) and 15.6% (profile 10), with an average of 9.8%, 4 percentage points above the average weighted return of mutual funds in Spain (according to Inverco).
Comparative performance of the different inbestMe portfolios up to September 2024
Up to September 2024, the average return of all inbestMe portfolios oriented towards medium and long-term investments (i.e., excluding the Savings, Target and Bond portfolios, which we analyze separately) was 8.8% or 3 percentage points above the average weighted return of mutual funds in Spain (according to Inverco).
Las The best performing portfolios have been the dollar Standard ETF portfolios, achieving 11.8% on average (2 points above average).
This was followed by the Euro Standard ETF portfolios, which showed an impressive return of 9.8% on average, outperforming the average by 1.0 percentage point.
SRI portfolios have generally been the worst performers due to ESG funds performing relatively worse during 2024.
We remind you that if you want to see more details about the performance of our portfolios (in this period or in others and for all portfolio types and risk profiles) you can consult the inbestMe performance page on our website where you will find the comparison with other benchmarks and risk ratios such as volatility, Sharpe Ratio and drawdown and for the different periods.
Accumulated yields and APRs at the end of September 2024
Our diversified portfolios of index funds and ETFs are designed for the medium and long term, and it is in this area that they should be especially scrutinized.
In the graph below we see a comparison of all the profiles of our portfolios compared to the different categories of Inverco’s statistics of mutual funds in Spain, from 2017 to the close of September 2024, so that we can compare our portfolios with mutual funds that cover the same asset class and have a similar risk profile. The cumulative return ranges from 8.1% for profile 1 to 90.5% for profile 10.
On average, our portfolios obtained a cumulative return of 48.2% compared to Inverco’s 15.7%, which is 32.5 percentage points higher.
This translates into an average annualized return (AER) for our portfolios of 5.0%. This is well above the average for Spanish mutual funds (1.8%) and, for each risk profile, returns are well above their respective benchmark, meaning that both low-risk and high-risk portfolios outperform the average of their comparable mutual funds.
On average, our portfolios obtain an annualized return of 5.0% (AER) compared to 1.8% for Inverco, which is 3.2 percentage points higher. It is noteworthy that in all the different categories, our portfolios outperform their benchmark. In particular, this difference is more significant in profiles 6 to 9, where most of our clients are concentrated, with differences of 3.5 to 6.3 percentage points.
Accumulated returns of the average investor profile on inbestMe
At inbestMe, the average investor profile is 7 (7/10)*. This average investor profile has remained almost unchanged over time since we started our activity.
In the top chart on the left we see how the average investor profile of inbestMe has obtained a 62% cumulative return from 01/01/2017 to 30/09/2024, or 45.4 percentage points more than the “Mixed Variable Income” category according to Inverco which in the same period is 16.6%.
On the right we see how the average investor profile inbestMe obtains an annualized return (APR) of 6.4%, which is 4.4 percentage points more than the “Mixed Equity” category according to Inverco, which over the same period is 2.0%.
*To make this calculation, we weighted the weight of the number of “investor” clients per profile over the total. For this we consider the different index fund profiles ranging from 1 to 10. Savings, target, and bond portfolios are excluded from the calculation of the average investor profile.
