Target portfolios to close June 2025: predictable returns and excellent risk-return ratio

Broad Range of Euro-Denominated Target Portfolios with YTMs Around 2% Allow for Target Cumulative Returns of up to 8%

At inbestMe, we offer a very complete range of target portfolios. We have active options with maturities in 2026, 2027, and 2028, in both euros and U.S. dollars for ETF portfolios, as well as a portfolio of index funds with a 2028 maturity in euros. The 2025 maturity is no longer available for ETFs, nor is the 2026 objective for funds.

All target portfolios have clearly outperformed their benchmarks.

The table below shows key metrics for some of our target portfolios from their launch (most on 09/15/2023) to 06/30/2025, in euros.

As shown, most currently have Yields around 2%, about 0.4% higher than the current YTM of the savings portfolio. All portfolios show positive cumulative returns and high APR/Volatility ratios (which means they have achieved solid returns relative to the level of risk taken). All have fulfilled their initial goal: to offer attractive APRs while also being fixed to a defined time frame (maturity) and aiming for target cumulative returns close to 8% (in the case of the 2028 objective).

This combination makes them attractive for investors seeking very limited risk (though slightly higher than the savings portfolio prior to maturity), with the advantage of locking in a somewhat higher YTM to maturity.

Wide Range of Dollar-Denominated Target Portfolios with YTMs Around 4% Allow for Cumulative Target Returns of up to 14%

The table below shows the same information for the U.S. dollar portfolios.

In general, the same logic applies to dollar-denominated target portfolios: however, current YTMs are around 4%. They’ve also accumulated higher returns so far for the same reason. For these portfolios, investors can target cumulative returns of up to 14.3% (2028 objective).

All Euro Target Portfolios Beat Their Benchmark: Short-Term Fixed Income

All euro-denominated target portfolios have clearly outperformed their benchmark index (Short-Term Fixed Income category) by between 0.4 and 3.2 percentage points.

This applies to the ETF-based target portfolios.

It also applies to the two target portfolios based on funds.

All Dollar Target Portfolios Outperform Their Benchmark: Short-Term Fixed Income

In this case, the outperformance is even greater, since the benchmark index is expressed in euros.

This is a good opportunity to emphasize again that investing in dollars only makes sense if it’s your reference currency or if you explicitly want part of your wealth exposed to the greenback.

The Difference from the Benchmark Grows with Longer Maturities.

This is expected: the longer the maturity, the greater the duration and risk—also visible in the charts.

All Target Portfolios Show Excellent Risk-Return Ratios

All target portfolios show very high Sharpe ratios: all above 1, several above 2, and one as high as 5.7. This is due to their excellent return/volatility profile (very low between 0.7% and 3%).

This confirms one of their key strengths: generating reasonable returns, above money market funds, with very low risk.

All Target Portfolios Outperform the Savings Portfolio

The following chart also shows something predictable: all target portfolios are accumulating more return than the savings portfolio.

Dollar target portfolios also clearly outperform the dollar savings portfolio.

However, it’s worth noting they present slightly more volatility than the savings portfolios. This volatility should not concern investors as long as they keep in mind that these portfolios are designed to be held until their target date.

Target Portfolios Will Continue to Outperform Savings Portfolios

Target portfolios will continue to outperform savings portfolios because the yield curve is no longer inverted, meaning bond YTMs tend to increase with longer durations.

A target return is not guaranteed, but it can be considered reasonably predictable. It cannot be 100% assured, since some bonds may be downgraded or replaced, or an issuer may default. However, given the high diversification of issuers in the target funds, such events—though unlikely—should have limited impact on the overall risk and return.

A Target Portfolio is Especially Useful for Investors with a Defined Time Horizon. For example, if you need €100,000 in 4 years (it also applies to 2 or 3 years) for buying a house, it is important to have a clear forecast of your investment’s return. In this context, it would not be wise to invest it all in stocks, as their value can fluctuate significantly. On the other hand, if your time horizon is more than one year, immediate liquidity (as in a savings portfolio) is not strictly necessary.

A target portfolio offers greater visibility on the expected outcome, making it more suitable than a traditional bond portfolio, whose return may vary depending on interest rate movements.