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A volatile week

February 9th 2018

We track, on a daily basis, the value of the goals in all client portfolios and compare it to the value of the same goals as at the beginning of each quarter.

It was a volatile 5 days (week of 5th of February) in global equity markets. The S&P 500 Index has now lost 8.54% this week and most global markets have turned negative year-to-date. We wanted to take this opportunity to write to our clients about this volatile period. Please bear in mind that, as a robo-advisor, we do not take views on the markets. We write quite a bit about how bad we believe active managers are in being able to forecast correctly.


Whenever markets fall the financial press always write a narrative that perfectly explain what caused the sell-off. This is what is referred to in the industry as “monday morning quarterbacking”. Providing all the answers after the fact. It is not to say that the narrative isn’t true or that does not perfectly explain the outcome, it’s just our normal human need to always want an explanation. This justification for this sell-off, so far, has been focused on the concern in markets over potential rising bond yields. Last week Friday the US economy reported job numbers that handsomely beat expectations. The general view is that we are now going through a paradigm shift. After years of easy monetary policies of low interest rates and quantitative easing we are now shifting to Central Banks (and especially the Federal Reserve) reducing their balance sheets. Less liquidity means a contraction in buying and risk appetites. This is coupled with the booming US economy driven by President Trump's expansionary fiscal and pro-business policies (yes, him again), this seems to have stoked fears that it could lead to an overheating economy and the Fed having to hike interest rates more. Famed investors calling for the biggest bond bear market in 40 years or a strong sell-off in equities are certainly contributing to sentiment.

This narrative could, and does, perfectly explain the recent market volatility. However, it is also important to bear a few things in mind. We have been in a bull market for almost 9 years. As we’ve all been enamoured with 1,000% cryptocurrency returns, it is easy to forget that we have seen years of exceptional returns in markets. Especially over the last two years. As we wrote in our year end market review article, prudent investors should expect lower returns in 2018. Markets can and do lose money. We would encourage all our clients to ensure that the risk they are taking in their portfolios with their chosen asset allocation matches their willingness to risk along with their capacity to bear any losses.

Just to let our clients know, we actually track, on a daily basis, the value of the goals in all client portfolios and compare it to the value of the same goals as at the beginning of each quarter. From the first trading day of the year, 3 January 2018, to February the 8th’s close if we had to rank all portfolio losses from largest to smallest the portfolios with the largest losses (as of the 8th of February) are 6.11% in our EUR portfolios, -5.93% in USD portfolios and -6.90% in GBP portfolios. We will also notify all clients when daily registered losses are 10% or above in any given goal, in relation to the goal value as at the start of the quarter to ensure they maintain an overview of their portfolio performance.

As always, if you have any doubts or questions please contact support@etfmatic.com however we’d like to remind all our clients that ETFmatic does not offer advice

With all investments your capital is at risk and the value of your investments and the income deriving from it can rise as well as fall. Past performance is not a guide to future performance.