Syfe 9% downside risk portfolio - target composition of 30% equities, 60% bonds and 10% gold Forecasted returns of 7.x% p.a. over 5 years seem implausibly high? - Seedly
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Anonymous

Asked on 08 Sep 2020

Syfe 9% downside risk portfolio - target composition of 30% equities, 60% bonds and 10% gold Forecasted returns of 7.x% p.a. over 5 years seem implausibly high?

I'm having a hard time believing that, for such a conservation allocation of assets, the 'internal backtested data' delivers an annualized return of 6.x%.

Can someone explain to me how is this possible when the historic long-term returns of a diversified 100% equity portfolio (eg IWDA/S&P 500) is 9.x%? Moreover, won't the low-interest rate environment, which will likely persist for these few years, further depress bond yields?

Also, are the forecasts/returns values displayed net of fees?

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If you feel it's too good to be true and suspicious, you can avoid it. Alternatively, you can further analyse their methods and math. Do note history dont always fortell future.

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Syfe

Syfe

Updated 2w ago

Hey there, thanks for your interest in Syfe. You've raised some valid questions.

Firstly, having a 30% equity allocation does not necessary mean that your expected returns should be lower. In fact it is possible to derive a return from bond-heavy portfolios as well since bonds help buffer portfolio losses during certain periods of time.

The Global portfolios are not built based on return potential but instead by a client's individual preference for the risk he/she wants to undertake. A 100% equity portfolio (eg IWDA/S&P 500) may give 9.x% returns but it will undergo far more volatility than a risk-managed portfolio like the 9% downside risk portfolio. What is the risk-return tradeoff an investor is comfortable with?

On bond yields, it is true that we can expect yields to be depressed to a certain extent but inevitably with lowered interest rates, bond prices typically tick up as well. For instance, the ABF singapore bond index fund is up 7%+ YTD although its yield is around 1.9%.

Lastly, the forecast / return figures you see on our website do not account for fees. Our fees start from 0.4% to 0.65% per year.

To understand more about our portfolios, please scehdule a complimentary call with our wealth advisors. They'll be better able to provide personalised advice.​​​

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Thank You!
Can you clarify
I wonder if
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