IskraIndex: Deposit+ Conservative Portfolio

The IskraIndex: Deposit+ Conservative portfolio represents an optimized combination of 10 index ETFs, which may include between 1 and 4-5 of them.

Backtest based on closing prices, with monthly rebalancing

The asset classes represented by the ETFs include government and corporate bonds, equities, real estate, commodities, and alternative investments. The bond and equity ETFs are geographically diversified across developed and emerging markets. Each ETF for the corresponding asset class is selected to be the largest in its class among those trading on U.S. exchanges. Thus, the Deposit+ portfolio incorporates three dimensions of diversification: within asset class indices, geographical, and across asset classes. In fact, it establishes a new global portfolio benchmark for its level of risk.

All IskraIndex portfolios are the result of optimization in the Expected Return - Risk plane. IskraIndex identifies the most efficient portfolios, where each level of risk corresponds to the highest possible expected return. Therefore, in theory, IskraIndex portfolios outperform any investment alternative of comparable risk. To better understand the optimization process, you can review the IskraIndex model core principles. The portfolio optimization methodology enables outperforming passive ETFs with fixed asset allocations in terms of returns, while simultaneously experiencing significantly smaller drawdowns.

Having a slightly higher average annual volatility (6.5% vs. 4.9%) and a maximum drawdown nearly three times smaller over the past 7 years compared to the global bond ETF, the Conservative Deposit+ portfolio offers an average annual return almost 10 times higher over that period. Thus, this portfolio can be viewed as an unconditional alternative to strategies based on global bonds.

An example of the IskraIndex Deposit+ model portfolio report that investors receive can be viewed here.

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