Asked on 30 Apr 2019
What is the performance for your portfolios in 2018? Will you be publishing this data online?
Thank you for your question!
We believe that investment returns should be looked at in the medium-to-long term, and that’s why we have never really shouted about our returns so far. We are however, not shy about talking about returns, and answering to our clients’ request in July 2018, we shared our performance publicly through our First Year Anniversary email. If you’ve attended one of our StashAway Academy seminars or sent in a WhatsApp to our support and asked about our returns, we’ve probably shared those numbers with you then as well. Our clients can also check their returns on a daily basis inside the StashAway App.
On performance, we generally recommend clients to have a look at our long-term backtested results on our website instead. The reason is that this actually "stress tests" our portfolios across several market corrections, economic recessions and across a much longer investment timeline. For example, it shows you how we would have performed in the Global Financial Crisis in 2008, and our portfolios' drawdown versus a benchmark.
StashAway Portfolios vs same-risk Benchmarks
You cannot talk about returns, without first talking about risk: it’s very easy to increase short-term returns by increasing risk, if you get lucky! Below I have attached the returns for our lowest risk portfolio, for a balanced portfolio, and for our highest risk portfolio since inception, as well as in 2018. These are 6.5%, 14% and 36% StashAway Risk Index, respectively.
The StashAway Risk Index is how we classify our portfolios. In itself, it is a measure of risk (Value-at-Risk at 99%) and you can read more about what it means here. We use public benchmarks to measure our performance on a “same-risk” basis. We base the benchmarks on 2 indices: the MSCI World Equity Index and the FTSE World Government Bond Index. The benchmark chosen for each portfolio is comprised of a mixture of world equity and world bond indices that have generated the same average volatility to the relevant StashAway portfolio between the 1st of January 2007 and the 31st of December 2017. This time period was chosen in July 2018 and we will periodically review it from the risk perspective. More importantly, this time period captures a range of economic scenarios and market conditions, such as the Global Financial Crisis in 2008, the European Market routs of 2011 and the taper tantrums of 2015, together with a long bull market.
For example, the table above shows that the StashAway Risk Index (SRI) 6.5% portfolio has the same risk as a 10% MSCI World Equity Index and 90% FTSE Government Bond Index portfolio, the SRI 14% portfolio is equivalent to 40% MSCI World Equity Index and 60% FTSE Government Bond Index portfolio and, the 36% portfolio has the same volatility of the MSCI World Equity Index.
Since inception on 19 July 2017, our portfolios have outperformed significantly their respective same-risk benchmarks at all risk points. Our lowest risk portfolio in particular, has returned 4pp more than its benchmark, the 14% SRI portfolio has overperformed a 40%-60% portfolio by 3.1pp and our highest risk portfolio has made 5.6pp more than the MSCI Equity World.This good performance is the outcome of intelligent diversification.
The above table shows cumulative returns in a 21.5-month period, which means that annualized returns of the 3 StashAway portfolios have been 3.2%, 5.2% and 11.3%, from lowest risk to highest risk respectively.
As requested, I have also shared below our returns and thoughts on 2018.
2018 was a negative market for most asset classes globally. In volatile times like this it’s important to have diversified portfolios to reduce losses, and it’s very positive to keep investing in order to benefit from “low prices”.
If you have been a client of StashAway during 2018, you might remember that we wrote several times that the February, October and December market losses were temporary corrections, and we recommended to stick to one’s plan. The below table does not take into account the benefits of dollar-cost-averaging, as it assumes a lump sum investment on the 1st of January 2018.
In 2018, the SRI 6.5% portfolio showed losses against its same-risk benchmark (1.9pp worse performance), while our 14% SRI balanced portfolio (equivalent to 40% equity, 60% bond portfolio) and our highest risk portfolio outperformed its same risk-benchmark by 0.7pp and 3.9pp respectively.
Overall, clients who read our CIO Newsletter and watch our Weekly Market Commentary, already know Freddy’s advice to not overreact, and to stick to their investment plan. Those clients would have seen a great recovery year to date in 2019.
When looking at returns, we believe it is important to consider a long-term horizon. Over the short term, market ups and downs are inevitable. If in 2018 the volatility of your portfolio(s) kept you up at night, perhaps it is time to relook the risk level you have selected and whether it is in line with your risk appetite.
I will leave you with an excerpt from our latest CIO Newsletter: “Today, on the other side of the same coin, we cannot emphasise enough how important it is not to get over-excited about amazing returns YTD, to stay invested, and to keep dollar-cost-averaging by sticking to your plans. Don’t try to “sell at the peak”, but also don’t bet the house on the fact that the rally will continue. Just stick to your plan.”. You can read the full article here.
See Important Notice & Standard Disclaimer at https://www.stashaway.sg/legal
We publish and update our actual investment performance at the close of every quarter. You may access it here: https://www.autowealth.sg/strategy.php
This is a reflection of our confidence and our transparency on actual investment performance.
Top Contributor (Aug)
Started stashaway since 2017 with risk profile 20% and consistent monthly contribution. Just logged in to check, USD performance is 11.5%, SGD performance 12.4%.
Top Contributor (Jun)
Stashway highest risk index: 36 Performance : 6.1% gain. Going for long term game.