When a donkey calls, an epi must follow. And @DonkeyInvestor has called!
So here at last is my contribution on the 3xGTAA wikifolio certificate. It seems to have become increasingly popular recently. I would like to answer the most important questions here - to the best of my knowledge and belief.
1. what is the 3xGTAA strategy and what does it want?
3xGTAA is a rules-based momentum strategy that invests mainly in 3x leveraged ETFs of various global asset classes (GTAA = Global Tactical Asset Allocation).
You can find my most important articles on the strategy in this collection of links from dear @Simon_n
https://getqu.in/tiooe5/
Since 3xGTAA can invest in Bitcoin, among other things, the backtests realistically only go back to 01/2018. Here the strategy showed a CAGR of approx. 45% (after leverage costs) with a vola of approx. 35% and a max. drawdown (monthly basis) of approx. 20%. In the period from 2007-2017 without Bitcoin, the CAGR in the tests was approx. 35% and the maxDD approx. 35% (financial crisis!). The real-time test since 10/2023 confirms these key figures. Since then, the daily volatility has been approx. 2.3% (roughly like Bitcoin 1/2026).
The strategy is therefore very aggressive, highly volatile at all time levels. It is therefore only suitable for investors who can and want to withstand the fluctuations.
2. what is the 3xGTAA wikifolio certificate and what is it for?
As the strategy reassesses the asset allocation every month and rebalances if necessary, the historical turnover rate is approx. 100-150%pa. As each asset switch incurs PES, the impact on returns is significant (approx. -20%pa, i.e. instead of 45%pa only approx. 25%pa). That is why I have set up a corresponding wikifolio in 5/24, in which the reallocations are tax-free. It therefore acts as a tax shelter. The wikifolio has been investable since 12/24. This means that any investor can follow the 3xGTAA strategy tax-efficiently and without any effort on their part.
Link to the certificate: https://www.wikifolio.com/de/de/w/wf03x0gtaa
The strategy in the certificate in concrete terms: The certificate starts with a price of €100 and a virtual volume of €100,000. These are divided virtually according to the 3xGTAA rules, normally 33% each to one of the assets with the highest momentum in the asset pool. The remaining 1% of the capital is reserved for the deduction of running costs. The certificate price is calculated from the performance minus the costs. So if the virtual volume is €200,000, the certificate price is €200 less costs. At this price, the investor can buy the certificate on the Stuttgart Stock Exchange, which reflects the allocation of the Wikifolio 1:1.
Link to the Wikifolio FAQ page: https://help.wikifolio.com/article/16-wie-funktioniert-wikifolio-com
3. what are the costs?
Cost factor 1: Buying and selling costs. The certificate can only be bought via the Stuttgart Stock Exchange. This charges €4 per trade. Added to this are the order costs of your broker or bank. The latter range from €0 to €20 per trade. So find out before you buy! My broker tip below.
Cost factor 2: Ongoing costs. The certificate fee (= TER) is 0.95%pa. These are deducted daily from the performance at the end of the trading day. Advantage: Trading costs are completely eliminated.
Cost factor 3: Performance fee. For each new high (high watermark), 5% of the difference between the old and new high is deducted. 50% of this goes to Wikifolio and 50% to the manager.
Cost factor 4: Taxes. For tax purposes, Wikifolio certificates are treated as other investment income for the purposes of capital gains tax. This is 25% + solidarity surcharge = 26.375%. However, this is only incurred when the certificate is sold and not when it is reallocated within the certificate.
4 What are the risks of the certificate?
Risk 1: The strategy (3xGTAA). The underlying momentum effect has been proven over centuries on all possible financial markets. But it can collapse at any time in the short or medium term (momentum crash). Since the model only trades at the turn of the month, the drawdown can be fast and deep (e.g. 4/25: -30% in 4 days). A fall to 0 is theoretically possible if the underlying markets of the 3xLeverage ETFs all fall simultaneously by more than 35% in one day. In practice, this is virtually impossible due to various regulations.
Risk 2: The manager (me). I can be run over by the trekker at any time and fail as Wikifolio manager. In this case, the current allocation would initially continue undiminished. As Momentum does not normally stop immediately, this is not yet a significantly increased risk. After two months at the latest, however, the signal should be evaluated and, if necessary, reallocated. If I don't report at all for two months in a row, I strongly advise every investor to sell! As additional security, I give my wife the access data to the Wikifolio so that she can leave a message there in an emergency. She can't trade herself as she needs her own access.
The donkey also fears that I could manipulate the wikifolio with malicious intent. This risk only exists if I deliberately want to harm myself. I currently hold over 640 certificates myself and am therefore probably the largest single investor. As long as this is the case, you can assume that I myself have an interest in good performance.
Risk 3: ETF issuers. Wisdomtree offers the most favorable 3x leverage ETFs. As these ETFs are swap- and future-based, there is no physical collateralization. If Wisdomtree goes bankrupt, you can only pray that a crumb of the insolvency assets will fall to you. But this will probably not be the case. The safest asset in the strategy in this respect is probably the Physical Bitcoin ETC.
Risk 4: Certificate issuer. The certificates are issued by Bank Lang und Schwarz. The bank can of course also go bankrupt. In this case, L&S has set up a trust fund to hedge the securities purchased for the Wikifolios. If the bank becomes insolvent, a trustee takes over and pays out the deposited securities to the investors. The risk here is manageable.
Information on collateralization: https://www.wikifolio.com/de/de/l/wikifolio-zertifikate-besicherung
Risk 5) Broker: Your broker can also become insolvent. As the certificates are collateralized by the issuer, it should theoretically be possible to transfer them to a new broker. However, the certificates are not special assets.
Risk 6) Investor: The greatest practical risk is probably the certificate investor himself. The high volatility and possible high drawdown can cause an investor to lose faith in the strategy at the very moment when its performance begins to return to the average.
5. tips on the certificate and so on
Brokers: Not all brokers offer Wikifolio certificates (none as a savings plan so far). The usual candidates Traderepublic and Scalable do not offer any. Full brokers are most likely to have the certificates, e.g. Consors, IngDiba, comdirect, Sparkasse. However, the order costs here are relatively high at around €15 per trade. In my opinion, Smartbrokerplus, which I also use myself as a satisfied customer, is the cheapest. Here, the order costs for orders of over €500 are €0. This means that only the €4 of the Stuttgart Stock Exchange remains.
If you want to register there, collect a €50 bonus and be nice to me, you can use the following link to the current bonus promotion: https://www.smartbrokerplus.de/de-de/freunde-werben/?pid=User_invite&c=refer_a_friend&cr_id=0dfc7a35a58cc37c44cbda8f01bc9527d184147aa42f96aab0bfc2b912482771
Minimum investment: Due to the unfavorable cost structure, I would recommend to always invest at least 1000€. This keeps the trading costs at SB+ at 2x4€, i.e. below 1%. If necessary, you can simply accumulate this money and only invest every 4 months, for example.
Timing: There are always community members who try to time the most favorable entry at 3xGTAA. Based on my own experience and that of others, I can say: it's pointless. You don't time a timing model! Trade when the spread is at its lowest (11-14). That is enough.
Portfolio weighting: Due to the numerous risks, I would strongly advise against 100% 3xGTAA. The strategy is nevertheless well suited as an uncorrelated return booster for the portfolio. For beginners who have only had experience with ETFs and equities, a gentle entry at 1-2% of the portfolio is a good idea. This allows them to get used to the high volatility and gradually increase the weighting to the optimum level. I'll explain how to determine this quite easily in next month's update. Spoiler: It's somewhere between 10% and 30%.
More momentum strategy wikifolios: If you are interested in other rule-based momentum models from long-standing community members, I can recommend the following two wikifolios, which should be investable soon:
1. Strategic Growth Basket of @randomdude : https://www.wikifolio.com/de/de/w/wf000stgrb
This wikifolio contains three momentum strategies with optimized weightings: 1xGTAA, 3xGTAA and LETSGO (2xSpytips plus gold).
2.US Momentum Leaders by @Krush82 : https://www.wikifolio.com/de/de/w/wf19021902
This wikifolio invests in the top 2 momentum stocks of the S&P500 according to an optimized rule set.
I should have answered the donkey's questions about the 3xGTAA certificate.
Do you have any more? What have I forgotten? Bring it on, this is the place, now is the time!
And now may the momentum be with you!
Your Epi
PS: Here is some more information on brokers and their costs for Wikifolios from @HoldTheMike : https://getqu.in/VoRM7Q/
