Top wikifolio Money Is A Solved Problem MoneySolved +43.2 % since Beginning +15.7 % 1 Year TOP WIKIFOLIO TRADE Buy 2023-01-05 at 03:50 pm VANG.FTSE DEV.W.U.ETF DLA IE00BK5BQV03 Price (EUR) 71.140 0.4% Last Activity Money Is A Solved Problem What a wild ride 2020 was! Due to a global pandemic global stock indices have fallen up to 40% and after this had the fastest recovery, that was ever seen in the stock market. This Wikifolio was born end of October 2020 and until the end of the year global stock indices have rallied a little more from which this Wikifolio has benefitted. In November and December the tilt towards small-cap-value stocks has also payed off as they were outperforming growth stocks and large caps at the end of the year. The historical long term advantage of Small-Cap-Value exposure has been shown in various publications (e.g. Estrada [2019], Felix [2020]). The Small-Cap-Value-Tilt will be kept in the Wikifolio and is combined with a Multifactor ETF to also get exposure to Momentum and Quality. The rebalancing within the first two weeks of January will be done to get to the following allocation: 60% - Global Index Funds: ----- 42% Developed World (LU1781541179) ----- 18% Emerging Markets (IE00B0M63177) 30% - Factor Investing: ----- 16% US Small-Cap-Value (IE00BSPLC413) ----- 4% EU Small-Cap-Value (IE00BSPLC298) ----- 10% Multifactor (IE00BZ0PKT83) 10% - Global Government Bonds (LU0908508731) One consideration during this year was to add a 1-3% Cryptocurrency allocation to the portfolio. Kajatzi and Moro [2019] have already shown, that Bitcoin has a place in today's diversified portfolio but it remains a very speculative asset. In the end of 2020 Bitcoin had a big run and resulted in all time highs, making it one of the best performing assets of the last 10 years. As of today the financial markets lack tools to cheaply follow the price of bitcoin (TER > 1,49%) and it is therefore not part of the Wikifolio. With VanEck issuing a Bitcoin ETF at the end of 2020 with the SEC, it is very likely that cheaper options will be available within 2021, which will be closely followed. Further financial tools that I am waiting for availability in Europe are a global Small-Cap-Value ETF (e.g. AVDV from Avantis). This will replace IE00BSPLC413 and IE00BSPLC298 with the intention to get Small-Cap-Value exposure to global markets, instead of only US and EU. The currently used Multifactor ETF (IE00BZ0PKT83) has a high TER with 0,50% and during 2021 hopefully cheaper alternatives will become available. One thing is sure - 2021 will be a very exciting year in the stock market. As the year begins, the Shiller-PE-Ratio for the S&P 500 is at very rarely seen high value of 34.19. This shows that stocks have a lot of downside potential currently, but the high valuations are based on expectations of a good economic recovery as vaccines are rolling out worldwide. Time will tell what we will see in 2021 and until then I hope that you are all safe and healthy out there and wish all of you a good start into the new year! ___________________________________________________________________________________________________________ Estrada [2019]: https://blog.iese.edu/jestrada/files/2019/11/FTAA.pdf Felix [2020]: https://www.pwlcapital.com/wp-content/uploads/2020/12/Five-Factor-Investing-with-ETFs.pdf Kajatzi and Moro [2019]: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3261266
Money Is A Solved Problem What a wild ride 2020 was! Due to a global pandemic global stock indices have fallen up to 40% and after this had the fastest recovery, that was ever seen in the stock market. This Wikifolio was born end of October 2020 and until the end of the year global stock indices have rallied a little more from which this Wikifolio has benefitted. In November and December the tilt towards small-cap-value stocks has also payed off as they were outperforming growth stocks and large caps at the end of the year. The historical long term advantage of Small-Cap-Value exposure has been shown in various publications (e.g. Estrada [2019], Felix [2020]). The Small-Cap-Value-Tilt will be kept in the Wikifolio and is combined with a Multifactor ETF to also get exposure to Momentum and Quality. The rebalancing within the first two weeks of January will be done to get to the following allocation: 60% - Global Index Funds: ----- 42% Developed World (LU1781541179) ----- 18% Emerging Markets (IE00B0M63177) 30% - Factor Investing: ----- 16% US Small-Cap-Value (IE00BSPLC413) ----- 4% EU Small-Cap-Value (IE00BSPLC298) ----- 10% Multifactor (IE00BZ0PKT83) 10% - Global Government Bonds (LU0908508731) One consideration during this year was to add a 1-3% Cryptocurrency allocation to the portfolio. Kajatzi and Moro [2019] have already shown, that Bitcoin has a place in today's diversified portfolio but it remains a very speculative asset. In the end of 2020 Bitcoin had a big run and resulted in all time highs, making it one of the best performing assets of the last 10 years. As of today the financial markets lack tools to cheaply follow the price of bitcoin (TER > 1,49%) and it is therefore not part of the Wikifolio. With VanEck issuing a Bitcoin ETF at the end of 2020 with the SEC, it is very likely that cheaper options will be available within 2021, which will be closely followed. Further financial tools that I am waiting for availability in Europe are a global Small-Cap-Value ETF (e.g. AVDV from Avantis). This will replace IE00BSPLC413 and IE00BSPLC298 with the intention to get Small-Cap-Value exposure to global markets, instead of only US and EU. The currently used Multifactor ETF (IE00BZ0PKT83) has a high TER with 0,50% and during 2021 hopefully cheaper alternatives will become available. One thing is sure - 2021 will be a very exciting year in the stock market. As the year begins, the Shiller-PE-Ratio for the S&P 500 is at very rarely seen high value of 34.19. This shows that stocks have a lot of downside potential currently, but the high valuations are based on expectations of a good economic recovery as vaccines are rolling out worldwide. Time will tell what we will see in 2021 and until then I hope that you are all safe and healthy out there and wish all of you a good start into the new year! ___________________________________________________________________________________________________________ Estrada [2019]: https://blog.iese.edu/jestrada/files/2019/11/FTAA.pdf Felix [2020]: https://www.pwlcapital.com/wp-content/uploads/2020/12/Five-Factor-Investing-with-ETFs.pdf Kajatzi and Moro [2019]: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3261266