Market phases such as the current one put our goals – and the determination with which we pursue them – to the test. Let’s start with an assumption: achieving your financial goals is not easy. Nor is it easy to identify them. Many variables come into play: an understanding of the financial markets, but also of your own emotionality. The ability to keep your nerves in check and constantly monitor your path. The readiness to change direction when necessary.
Moneyfarm was born to enable you to do all this, with simplicity and accessibility, with the belief that no one knows you better than you – but that one of our consultants and a diversified, low-cost investment strategy are the best possible alternative. We were established to enable everyone to manage their savings as professional investors do, with transparency, with an Asset Allocation team that constantly manages and monitors their portfolios, and, of course, with our team of consultants.
Today, all this is embodied in our investment portfolios. But we are growing, and evolving, hand in hand with your needs: that is why we will be enriching our offering in the coming months, to give you even more value and to support your financial journey even better, while keeping our long-term diversified portfolios as our foundational basis, because we are convinced that time is the investor’s best friend.
In the long term, there is great value. That is why it is our north star, and our team of consultants supports you to make sure that it is for you as well. When we manage your savings and those of all our clients, we don’t aim to beat our competitors in the short term. To do so we would need to take on too much risk; it would be inconsistent with an investment management strategy focused on the long term. We want to generate good returns for you by managing portfolio risk. In fact, our goal is to be consistently in the top tertile of performance: in our view, this positioning captures the right balance between short-term risk and long-term returns. In other words consistency of performance is more important than short term one off wins.
At times, this may mean giving up potential outperformance in the short term in order to keep risks in check and be more dependable over the long term. If we look at our five-year track record, the comparison with ARC indices testifies to the success of our strategy net of costs.
In achieving these results, our Asset Allocation team continues to play a key role. Let me give an example: with the outbreak of the Russian war against Ukraine, we decided to reduce risk in our portfolios by underweighting European equities. In retrospect, this slightly penalised our performance when – fortunately – the situation stabilised somewhat. But in many ways, this penalty is “intentional”, because it allowed us to protect you from possible negative outcomes. To stress it again we will never prioritise short-term performance at the expense of risk management.
Costs also play a key role. Our investment portfolios have one of the most competitive costs in their class, thanks to the use of technology and efficient instruments such as ETFs. Just look at MiFID reporting to verify this. This factor releases its positive impact in the medium to long term, when the compounding effect of the cost advantage on net performance is realised.
The long term is our time horizon. Not the next few months, nor the next quarters. As mentioned, years like 2022 put our goals and values to the test. But long-term investment principles must always remain the focus of our actions. We do not believe that there has been a structural change in the markets that would alter our expectations for future returns. On the contrary, the rise in interest rates and its impact on the bond component of the portfolio will bring benefits, that is, higher expected returns, for investors with a long time horizon and who are in the accumulation phase of their financial journey.
Thanking again for your trust, I would like to remind you that your consultant is always available to help you get the most out of your savings, whatever the market conditions. In the long run.
Giovanni Daprà (CEO)
*Capital at risk. Tax treatment depends on your individual circumstances and may be subject to change in the future.