Buy and hold via ETF: a success story
Luxembourg, 07 July 2020 – The MSCI World Index has gained some 270 per cent since 1994. The Dax has seen gains of about 480 per cent in the same period. Sound profits for all those who invested at the time and simply let the markets run their course. This goes to show that it pays off to pursue a buy and hold strategy. “ETFs are very well suited for this form of investing in large indices”, Swen Köster, Head of Sales Germany at Moventum S.C.A., pointed out.
Exchange-traded funds (ETFs) replicate an index as closely as possible. Buying ETFs tracking the MSCI World Index will get investors the performance of the index at low fees. “ETFs really showcase their benefits when investors are looking for long-term investment in large and easily observable markets”, Köster explained. “A simple glance at the daily newspaper is usually sufficient to track the success of your investment.”
In the past few months, in particular, such as glance has not always been pleasant, though. Unlike some of the actively managed products, ETFs are tracking the index very closely, including when it is falling. “It is difficult to sustain a decline of some 35 per cent”, Köster added. “But since the crash happened very quickly, private investors were frequently taken by surprise and did not even have sufficient time to sell.” Clients supported by financial advisors also stuck to their strategies and stayed invested. “In general, mainly institutional investors who needed liquidity because of their investment guidelines – or who were forced to comply with risk ratios – ended up selling”, said Köster.
The rapid resurgence of the stock markets entailed benefits primarily for advisor-supported clients: “Many advisors suggested to make additional purchases during the crash, and we can see this in the turnover on the platform”, Köster highlighted. “These clients are now happy to see their portfolios back at the same levels or even higher than before the slump.” Again, ETFs have also risen at close to a 1:1 ratio.
To financial advisory services, ETFs have become an almost indispensable option. “ETFs are a very good building block for tailor-made advice to clients, allowing it to cover a broad market at low cost”, Köster indicated. They allow advisors to combine inexpensive and uncomplicated products to create customer-specific strategies. “It is possible to represent different asset classes, regions, sectors, specific topics or strategies in this way”, said Köster.
In addition to the ETF selection, Moventum also offers ready-made ETF portfolios: the “MOVEeasy – inspired by Vanguard funds” strategies, available in four risk/reward profiles from defensive to growth-oriented. “The MOVEeasy strategies make it easy for advisors to offer their clients the benefits of ETFs without having to worry about selecting and combining ETFs”, Köster illustrated.
Moventum’s MOVEactive ETFs take the concept one step further: actively managed asset management combines passive ETFs with active management in a professionally managed portfolio. Again, advisors can choose from four risk/reward profiles for their clients. The profiles are diversified via different ETF providers, are reviewed quarterly in terms of asset class weighting with rebalancing where necessary. These tasks, as well as the selection of individual securities, are carried out by the Moventum Asset Management S.A. team, which has a long and very successful track record. In addition, advised clients are receiving detailed quarterly reports.
“Just like the individual ETFs, the MOVEeasy and MOVEactive ETF combinations are also available via savings plans after a one-time investment”, said Köster. “This means that clients benefit from preferential conditions without transaction fees in this case as well.”
Additional information is available at www.moventum.lu.
Moventum Asset Management S.A. (Moventum AM) is a wholly owned subsidiary of Moventum S.C.A. The management company, in which Moventum’s asset management expertise has been concentrated since the beginning of 2019, manages Moventum’s own funds and individual mandates as part of its asset management portfolios.
As an independent financial service partner, Moventum S.C.A. is specifically addressing financial service providers such as financial advisors, asset managers, institutional investors, and NGOs. Its services in asset management and asset building include a web-based securities investment platform focusing on funds, relieving financial advisors of administrative tasks, and integrating custody and account management for individual investors. Investment management tools, regulatory-compliant reporting and individual securities services are also part of the full-service range. Standardised fund asset management service with a sustainable, successful track record for the relevant risk/reward profiles complements the offering. The Moventum Group also enables institutional investors to outsource securities processing in its entirety. The MoventumOffice investment platform offers access to more than 9,000 investment products including funds and ETFs from more than 400 investment firms, including the use of analysis, reporting and support tools.
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