IG Smart Portfolios: one-year track record

A year on from the launch of IG Smart Portfolios, we are pleased to be able to release our returns for the past year. Clients have made attractive returns, with considerably less volatility than equity indices.

The value of investments can fall as well as rise, and you may get back less than you invested. Past performance is no guarantee of future results

Nine months after IG Smart Portfolios first went live we were, to be frank, getting a little exasperated. Stock markets were going up in a straight line, with volatility almost non-existent. How could we extol the virtues of a diversified asset allocation when the market had not a care in the world?

Three months on, times have changed. Risk is back on everyone’s lips; bond yields have crept up, equity markets are down from their highs and President Donald Trump’s decision to impose tariffs on US steel imports has caused more market jitters. In these normalised market conditions risk matters, and this is where IG Smart Portfolios can provide a dependable way to invest your wealth over the long term.

Diversified investments

The primary aim of these portfolios is to be diversified, shielding you from excess stock market gyrations. This will allow your investment allocation to harvest, what the industry calls, long-term ‘market risk premia’ from the most dependable and predictable asset classes

In the table below we display the asset-weighted, one year net-of-fees composite performance of our portfolios. Please note that your management fee may be higher or lower, depending on your investment size and whether you qualify for discounted fees.

IG Smart Portfolios: net of fees composite*
28.02.2017 - 28.02.2018

   
Conservative -0.6%
Moderate 1.8%
Balanced 4.1%
Growth 5.5%
Aggressive 7.2%
   
FTSE 100 TR 3.4%
MSCI World TR 5.7%


* The composite is asset weighted, net of management fees. Management fees are as follows: Conservative 0.37%, Moderate 0.36%, Balanced 0.38%, Growth 0.49%, Aggressive 0.35%.
Risk warningpast performance is not a reliable indicator of future returns.

Exclusively looking at a 12-month number doesn’t tell the story of the journey that portfolios have taken to reach the endpoint. In the two charts below we show in more detail how the Growth portfolio has fared compared with the FTSE 100, an index that most of our clients will be familiar with. 

Over the past 12 months, the portfolio has experienced lower peaks and lower troughs than the FTSE 100, illustrating that it is taking on less risk. We can express this mathematically by calculating volatility, which shows that the portfolio has recorded nearly 30% less volatility than the FTSE 100.

Examining the drawdowns — which looks at the amount of value an investment has lost from its most recent high point — it is evident that the Growth portfolio has been able to protect investors in sell-offs. This is partly due to holding less in equities, but also due to the global diversification built into the portfolio. Rather than having one hundred positions, as the FTSE 100 does, the portfolio instead has many thousands of underlying holdings through the exchange traded fund (ETF) allocations.

Finally, for those that are interested, we display the risk and return statistics for the Growth portfolio against the FTSE 100.

Statistics: 28.02.2017 - 28.02.2018

  Growth FTSE 100 Difference +/-
Total return 5.5% 3.4% 2.1%
Volatility 6.7% 9.4% -2.7%
Beta 0.62    
Correlation 0.87    
Risk adjusted return 0.82 0.37 0.46
       
Max drawdown -6.5% -8.8% 2.3%
Date of peak 23 January 2018 12 January 2018  
Date of trough 9 February 2018 9 February 2018  


Source: IG, March 2018
Risk warningpast performance is not a reliable indicator of future returns.

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●  Understand how to build a diversified portfolio and manage your risk

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This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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