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Our Portfolio Styles: Starter Portfolios

March 17th 2017

The Straight-forward way to control your asset allocation. Pick the pre-defined portfolio that best suits your long term risk profile.

Update: Investment styles, such as Starter Portfolios, Investment Plans and Custom Goals, have been combined and are now managed via advanced features.

This article is the first of a 3 Part series describing our Portfolio Management Styles. We hope this provides additional transparency and helps you better understand our offering. You can read about it in more detail in our whitepaper and check our Investors Corner at any point to access videos and quotes from experts.

Starter Portfolios are our most straight-forward portfolio management style, allowing our clients to simply “plug and play”. We make it incredibly easy for anyone to select a portfolio that matches their long term risk profile based on three broad risk categories: Conservative, Balanced and Aggressive. Choosing amongst these three risk categories will result in a portfolios with different asset allocations. More conservative risk profiles will have a higher allocation to bonds (historically safer investments) while more aggressive portfolios will have a higher allocation to equities (growth assets).

The primary aim of our starter portfolios is to allow you to easily and simply invest in an asset allocation combination that matches your long term risk profile. This target asset allocation that you select can be seen as the “True North” of your portfolio. As markets and therefore your investment change in value over time, the percentage weights of those investments will naturally fluctuate and drift. Our aim is to periodically bring those drifted weights back to their target so that the combinations of equities and bonds, and therefore risk in the portfolio, matches the risk category you selected at the outset.

Once you have selected the right asset allocation you then simply hand over the portfolio management to us. As your investment manager we select the underlying ETFs for every asset class . We invest your cash in the same proportion as your target weights and then periodically rebalance your portfolio by bringing any drifted weights, back to target. As starter portfolios have fixed weights, the risk and combination of assets will not dynamically adjust based on market movements.

Advantages of our starter portfolios
  • A straightforward portfolio management solution.
  • The ability to select the most suitable profile given their risk and return objectives.
  • Setting a precise asset allocation, from 0 to 100% invested in equities/bonds.
  • Rebalancing their portfolios correctly with increased contributions.
  • Not having to worry about the index selection, ETF implementation, tax-efficient rebalancing and ensuring that the portfolio maintains its’ risk profile as markets and asset classes adapt and change
Disadvantages of our starter portfolios
  • The disadvantage with allowing clients to only choose a bond/equity allocation that matches their risk profile is that the portfolio won’t necessarily reflect all their unique preferences. That is why we have designed our Investment Plans and Custom Goals.

Have a look at how a Starter Portfolio responds over time.

ETFmatic Starter Portfolio: Simplified simulation 10 year goal.
Static target Bonds 50% Stocks In the beginning, contributions are enough to pull the portfolio back to target at each trade The 1st big market shift, goal weights are pulled off target and slowly move back to target Another shift and the client decides to change their target weightings

Starter Portfolios are our most straight-forward portfolio management style. When you are ready, you can switch your portfolio style to an Investment Plan or Custom Goal. But you don't need to, many investors including Warren Buffett recommend the strategy implemented in the Starter style.

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.