Preface:

In the following, I would like to present how my portfolio has developed over the course of 2024.

This includes

1) my strategic orientation

2)Return on the portfolio.

The main topics are:

• Moving away from individual stocks
• Entry into gold and bitcoin
• Factor investing

Finally, I will give my own thoughts on how to proceed.

The main changes to my portfolio that have led

to my current strategy are presented below using a short timeline.

timeline:

My timeline

Beginning of 2024

At the beginning of the year, I pursued a 70/30 core satellite

strategy. The 70% ETF core again consisted of STOXX Europe.

MSCI World, Emerging Markets.

The 30% consisted of stocks such as: $CSIQ (-0,18%) , $O (+0,33%) ,$TSM (+1,24%)
$ADM (+0,86%)
$UMI (-0,05%)
$D05 (-0,7%)
$BMW (-1,09%)
$UKW (+0%)
$8031 (-3,27%)
$MUV2 (-1,85%)

February

Addition of gold to my portfolio. Target size 10%. Build-up in batches.

The remaining 70/30 strategy therefore only relates to the remaining

90%.

April-June:

Entry into Bitcoin via Trade Republic in several batches

at prices between 50k and 63k.

After exchange with @Epi to the fee schedule at Trade Republic

I sold them there in order to sell Bitcoin on a dedicated crypto exchange.

exchange.

June:

Thanks to @PowerWordChill I got to grips with factor investing. A Gerd Kommer book later, and after some internet research, I decided to

decided to transform my ETF strategy into a factor ETF strategy.

July-August 2024:

Sale of my shares. Concentration on the factor portfolio.

August - September 24:

Renewed build-up of Bitcoin with the aim of making Bitcoin a

a fixed component of the portfolio. Consideration is 5%-10%

of my portfolio.

The idea. Build up an initial position, then make regular

investments of €50 per week with the aim of growing to the target size

to grow to the target size. The rapid rise in October/November led me to

led me to leave it at €50 per week. And individual purchases in

larger tranches at an early stage with a portfolio size of 2.x%.

End of December 2024:

Position size of Bitcoin almost 5%.

I am not yet including Bitcoin in my gold/ETF quota. I'm still running it on the side.

I re-evaluated my factor weighting at the end of the year

and would like to fine-tune it a little. I will briefly present the result in the

following section.

In addition, I have decided to include a small

include a small proportion of real estate stocks. However, this will probably never

part of my strategy worth mentioning and contains - as of today - only

about 3% of my portfolio and only $O (+0,33%) ).

Overall breakdown of my portfolio:

As described above, I do not yet include Bitcoin in my overall strategy

part of my overall strategy so that rebalancing remains easier. This will

change when Bitcoin reaches its target size.

The rest is made up as follows:

ETFs:

$XDEM (+0,14%) 30.3% (MSCI World Momentum)

$XDEB (+0,09%) 10.1% (MSCI World Minimum Volatility)

$XDEV (-0,06%) 10.1% (MSCI World Value)

$ZPRV (-0,14%) 15% (MSCI USA Small Cap Value Weighted)

$ZPRX (-0,33%) 6.5% (MSCI Europe Small Cap Value Weighted)

$PEH (+0,25%) 4.5% (as a quality factor on emerging markets)

$5MVL (+0,21%) 4.5% (Edge MSCI EM Value)

$SPYX (-0,51%) 9% (MSCI EM Small Cap)

Gold

$EWG2 (+0,71%) 10% Gold ETC

Getquin Rewind and own data:

At the end of the post you will find my Getquin Rewind, as I was not able to embed the image in the text:

However, according to my own calculations, this cannot be correct.

My portfolio volume at the start of the year was around €103,500 with a return of €16,693. This would correspond to a total return of 19.2%. However, we are not yet talking about a time-weighted return, as my invested capital has roughly doubled over the course of the year. I therefore estimate my TTWROR to be higher.

My own thoughts and outlook:

I do not expect any major changes in strategy over the next few years. At some point, a strategy will have to be established. If necessary, I will make some adjustments to this strategy.

This includes the fact that I am dissatisfied with the costs of the emerging markets factor ETFs. So far, however, I intend to live with it. Should I

stumble across better products, I will consider switching. Especially as long as I stay within the tax allowance when switching.

I'll also have to decide how big my Bitcoin holding should ultimately be.

If you've been reading carefully, you'll notice that a lot of money has accumulated in the last year. Big profits, big investments. Due to personal circumstances, I will not maintain these rates in the same style, but will reduce them somewhat. I expect to be able to continue investing around 1.5-2k per month. This means that my financial goals are

with an expected return of 5% adjusted for inflation over many years.

I am half hoping for major setbacks in the near future and the associated favorable entries. However, in view of the impact that minor price jolts have had on society as a whole (thanks to populism), I don't really wish for them.

Do you have any suggestions, questions or comments? Is there anything that particularly interests you?

I am also happy to receive suggestions for improvement for future posts.

Best regards,

Your Smurf

PS: @DonkeyInvestor and me, that's love ❤. And now send me your coins! (So I can reward your next post appropriately).

PPS: I hope someone is interested.

Smart Beta ETF

Part 3 - Low-Volatility ETF

Disclaimer: No investment advice or recommendation, this article is for information purposes only. Before you decide on an ETF, take a closer look at it in terms of positions, sampling, regions, etc. I can't describe everything here as it would go beyond the scope of this article

Part 1 (Definition, Categories & Z-Score and Quality Factor): https://getqu.in/RCSY4a/

Part 2 (Value ETF): https://getqu.in/Nfnhqb/

What is volatility?

Volatility is a measure of risk for a share; it is determined by the range of fluctuation around the mean value of the share price. Put simply, the more volatile a share is, the higher or faster its price changes. The CBOE Volatility Index, often abbreviated as the VIX Index, is very well known:

This measures the volatility of the S&P 500. A low VIX indicates stable markets and a high level of confidence among market participants. If, on the other hand, volatility rises, investors expect greater market fluctuations in the future and are generally more uncertain. The spikes in 2008 (Lehman Brothers bankruptcy) and 2020 (coronavirus) illustrate this very clearly.

However, the risk can increase in phases of low volatility, as investors are inclined to take more risks in calm phases. In my view, this can currently be seen in the hype surrounding leveraged ETFs.

Since volatility is used as a risk index, this simply means that the higher the volatility, the higher the inherent risks and since risks are rewarded with returns on the stock market, volatility is reflected in valuation models for shares, e.g. in the form of the beta factor in the discounted cash flow model, which gives a "safety discount" in the valuation.

Low Volatility ETF

What are low volatility ETFs?

These ETFs focus on shares that have a relatively low historical volatility. The primary aim is to minimize risk and therefore not to optimize returns. They are therefore suitable for risk-conscious investors who, for example, want a more stable performance over the years or do not want to be so badly affected by crashes. High volatility can also cause stress for some investors, which is why low-volatility ETFs are the "calmer" option.

The example of 2020 (corona-related high volatility) shows very clearly that risk minimization is the top priority here. The drawdown of the World Minimum Volatility was "only" - 23 % at the beginning of the year, while the World ETF recorded - 30 %. However, during the subsequent recovery, minimum volatility lagged well behind its parent index.

In times of prolonged negative stock market years, e.g. 2015-2017 ("China crash"), minimum volatility ETFs can certainly achieve a small excess return (see chart 2). In the long term, however, this also levels out.

Low volatility ETF

The following is a selection of well-known low volatility ETFs and their calculation logic.

MSCI Low Volatility ETF

Optimization based on "Barra" score with focus on low beta and volatility

• $MVOL (+0,09%) (World | TER 0.30 % | TD 0.01 % | 2.6 bn | 3Y underperf. vs. world -5,5 %. |3Y Vola 11.6% | max Drawdown 29%)
• $XDEB (+0,09%) (World | TER 0.25 % | TD n.a. | 0.5 bn | 3Y underperf. vs. world -4,8 %. 3Y vola 11.6% | max drawdown 29%)
• $MVUS (+0,26%) (US | TER 0.20 % | TD -0.20 % | 1.7 bn | 3Y underperf. vs. S&P 500 -4,1 %. 3Y Vola 15.6% | max Drawdown 33%)
• $MVEU (+0,5%) (Europe | TER 0.25 % | TD - 0.07 % | 0.8 bn | 3Y underperf. vs. Eurostoxx 600 -3,8 % 3Y Vola 11.0% | max Drawdown 30 %)

Index methodology:

• First the starting (parent) index is calculated, here e.g. MSCI World. Then optimizations, e.g:
• a share may never be represented by more than 1.5% or 20 times the parent index (i.e. if 0.005% in the parent index, max. 1%) Minimum share: 0.05%
• Country weighting no more than +/- 5% of the parent index (if > 2.5%)
• Barra Optimizer is then used to put together the portfolio with the lowest risk (mathematical model that incorporates macroeconomic and microeconomic parameters)
• The aim is to achieve a lower beta and lower volatility as well as a lower weighting of large caps compared to the parent index.

Invesco: High dividend with low volatility

• 
  $HDLG (+0,29%) (US | TER 0.30 % | TD - 0.48 % | 0.4 bn | 3Y Underpfer. vs. S&P 500 -1,1 % | Dividend yield 3.6 %. |(3Y vola 16 % | max drawdown 40 %)

Index methodology:

• 50 high-dividend stocks are selected from the S&P 500, the individual weight of the stocks in the ETF may only be between 0.05 % and 3 %, and a CIGS sector (Global Industry Classification Standard - 11 in total) may contain a maximum weight of 25 %
• Dividend ranking: shares are sorted in descending order according to their 12-month dividend
• 75 stocks with the highest dividend yield are selected, with a maximum of 10 stocks per CIGS sector
• Volatility: the volatility of the last year is now calculated for the 75 shares and the 50 shares with the lowest volatility mark the selection for the ETF.
• Insufficient diversification? One might think that the small selection of only 50 stocks leads to insufficient diversification. However, studies have shown that even with 50 stocks, the non-systemic (company-related) risk is almost leveled out:

Conclusion:

In my view, personal resilience and risk tolerance play the biggest role in the choice of a low volatility ETF. If market fluctuations make you sleep uneasily, it can be a good idea to include such ETFs in your portfolio. Even if you are sitting in cash, for example, and the market seems overvalued, such a vehicle can be a sensible way to enter with a slightly limited risk.

Of the ETFs listed, the Invesco Dividend ETF appeals to me the most, as it contains a risk adjustment with sector and volatility weighting compared to classic dividend ETFs.

Do you have low-volatility ETFs in your portfolio? What are your opinions on this?

#etfs
#dividend
#dividenden
#diversifikation
#etf
#smartbeta