Halfway the competition, last year’s winner Rico Bosma (pictured), a fund analyst for Wealth Management Partners in The Netherlands, has once again emerged on top.
This time he did it with a portfolio composed entirely of trackers.
Bosma’s portfolio, a combination of regional equity index-trackers and sector ETFs, continued to generate a consistent return of 5.7% over the past three months, while his overall return since April totals 14.6%. Bosma credits his repeated success to a number of factors.
“I managed to get through October relatively unscathed thanks to my large allocation to the dollar,” he told Expert Investor Europe. His exposure to three ETFs which track US health, technology and utility stocks also paid off. “Many investors are looking for yield, so they often end up buying high dividend-yielding stocks like those in the utility sector.”
Fatal bet
The top-3 fund pickers in the first three months of the competition fared slightly differently, all posting negative returns in the three months to end October. Tim Peeters, the Belgian fund selector whose portfolio is composed solely of natural resources funds, suffered the heaviest blows. He saw the value of his portfolio plummet by more than 25% against a backdrop of falling commodity prices, after initial gains of 13.3% in the first three months of the competition.
Albert Montero from Morabanc in Andorra, who was leading the competition after three months, slipped back to fifth spot despite having chosen the best-performing fund in the competition: the Direxion Daily FTSE China Bull 3X ETF fund, a leveraged ETF which duplicates the FTSE China Index, aiming to achieve a 300% higher return in a rising market. Since April, it realised a return of 49.9%.
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Bosma’s compatriot Henk van Eldik, a fund consultant based in Luxembourg, and Birgir Stefansson from Icelandic pension fund LSR, sneaked up the ranking in Bosma’s slipstream. Van Eldik achieved a performance of 13.8%, slightly more than the 12.3% for Stefansson.
Focus on allocation or manager selection?
Bosma deliberately chose to compose a regionally diversified portfolio consisting entirely of trackers. “When constructing a [equity] portfolio my main goal is always to beat the MSCI world, so that’s why I have chosen to have exposure to most regions. The only region I left out is Japan,” he explains.
“Besides that, having picked eight active funds for last year’s competition I only selected ETFs this time because I wanted to see what’s more important: asset allocation or manager selection”, he says. “I wanted to see whether I would make similar returns by focusing just on low management costs.” Well, we are only halfway now, but the least we can say is that Bosma made a pretty good allocation bet in both instances.
