As a complement to the reporting of our mid-2024 portfolio returns, here we review the performance of the dollar ETF portfolios.
It is also worth remembering that dollar portfolios are suitable only for those investors whose economy is “dollarized” or who want to have exposure to the dollar expressly as 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 exchange rate movements between the two currencies.
Here we will focus on the performance of Standard Dollar ETF portfolios.
Returns on dollar ETF portfolios have continued to be good through mid-2024
The mid-2024 returns of our dollar ETF portfolios have been in line with the exceptional returns of this first half of 2024.
Portfolio returns range from 1.3% for profile 1 to 7.4% for profile 10. On average (profile 1 to 10) the dollar ETF portfolios have accumulated 5.2% or 0.5 percentage points less than the Euro portfolios.
But, last year, the reverse had been true. Dollar ETF portfolios outperformed their Euro counterparts by almost 3 percentage points, on average. We will see below how dollar ETF portfolios have outperformed Euro portfolios over the long term.
The performance of dollar ETF portfolios maintains long-term outperformance.
Our investment portfolios are designed for the medium to long term. It is in these terms that we like to go deeper, since it is where indexing shows its great advantages, by compounding returns (due to the effect of compound interest) over time.
Cumulative returns since 2017 are truly exceptional, from 24.2% to 89.7% for profile 10. The average cumulative return is 57.8%, compared to 37.6% for portfolios in Euro ETFs, or 20.2 percentage points higher.
In the chart above we see how the annualized return (APR) of the dollar portfolios ranges from 2.9% for profile 1 to 8.9% for profile 10, on average 6.2%, 2 percentage points higher than the Euro ETF portfolios.
On other occasions, we have commented that dollar ETF portfolios are somewhat more volatile (10% on average) than Euro portfolios (9% on average). If we compare the risk-adjusted returns in Euro and Dollar, they are equal.
