Multi Asset ETFs

Nirnaeth · May 6, 2020, 8:15pm

Over the last decennium, active investing has given way to passive investing, with stock picking being replaced by factor based investing, even more so as few active managers can beat the market and those that do fail to do so consistently.
Therefore, my approach is a multi-asset one that follows the economic cycle, with both Long and Short positions. I’ll explain more on the forum in due course as it’d be of interest to more people, but in essence you cycle in/out asset classes as the economy changes in order to capture as much upside, whilst minimising any downside.
As an example, currently we’re in a deflationary environment and you want to be Long in Healthcare Equities, but Short in Energy ones. You want to have Long Duration Treasuries for Fixed Income, but avoid TIPS. You want to have Gold as a commodity, but stay away from Oil.
In order to do this, I would kindly request you to load the following ETFs on your platform. I’ve ensured that they’re all of the UCITS variant and have a KIID so they can be legally traded in the UK, and have also cross-checked them against what you already have. However, if I overlooked one I apologise.
Thank you for your assistance. Without further ado, here’s my not insignificant list:

Equities - Factors
SPLV Low Beta - iShares Edge S&P 500 Minimum Volatility UCITS ETF
https://www.ishares.com/uk/individual/en/products/251383/ishares-sp-500-minimum-volatility-ucits-etf
IWM Small Caps - iShares MSCI USA Small Cap UCITS ETF
https://www.ishares.com/uk/individual/en/products/253480/ishares-msci-usa-small-cap-ucits-etf
MTUM Momentum - iShares Edge MSCI USA Momentum Factor UCITS ETF
https://www.ishares.com/uk/individual/en/products/272019/ishares-msci-europe-momentum-factor-ucits-etf
iShares Edge MSCI World Momentum Factor UCITS ETF
https://www.ishares.com/uk/individual/en/products/270051/ishares-msci-world-momentum-factor-ucits-etf
iShares Edge MSCI USA Momentum Factor UCITS ETF
https://www.ishares.com/uk/individual/en/products/285208/ishares-edge-msci-usa-momentum-factor-ucits-etf-usd-acc-fund
iShares Edge MSCI USA Multifactor UCITS ETF
https://www.ishares.com/uk/individual/en/products/277532/ishares-factorselect-msci-usa-ucits-etf

Fixed Income
IB01 - Ultra Short Duration Treasuries - iShares Treasury Bond 0-1yr UCITS ETF https://www.ishares.com/uk/individual/en/products/307241/ishares-treasury-bond-0-1yr-ucits-etf-usd-dist-fund SHY Short Duration Treasuries - iShares Treasury Bond 1-3yr UCITS ETF
https://www.ishares.com/uk/individual/en/products/251715/ishares-treasury-bond-13yr-ucits-etf
IEF Medium Duration Treasuries - iShares Treasury Bond 3-7yr UCITS ETF https://www.ishares.com/uk/individual/en/products/253744/ishares-usd-government-bond-37-ucits-etf-acc-fund TLT Long Duration Treasuries - iShares Treasury Bond 7-10yr UCITS ETF
https://www.ishares.com/uk/individual/en/products/251716/ishares-treasury-bond-710yr-ucits-etf
EDV - iShares Treasury Bond 20+yr UCITS ETF https://www.ishares.com/uk/individual/en/products/272124/ishares-usd-treasury-bond-20-yr-ucits-etf LQD Investment Grade Credit - iShares Corp Bond UCITS ETF
https://www.ishares.com/uk/individual/en/products/251832/ishares-corporate-bond-ucits-etf
HYG High Yield Credit - iShares High Yield Corp Bond UCITS ETF https://www.ishares.com/uk/individual/en/products/295888/ishares-high-yield-corp-bond-ucits-etf-gbp-hedged-dist-fund TIP Tips - iShares TIPS UCITS ETF
https://www.ishares.com/uk/individual/en/products/251714/ishares-tips-ucits-etf
iShares Fallen Angels High Yield Corp Bond UCITS ETF
https://www.ishares.com/uk/individual/en/products/283872/ishares-fallen-angels-high-yield-corporate-bond-ucits-etf
iShares $ Corp Bond 0-3yr ESG UCITS ETF
https://www.ishares.com/uk/individual/en/products/280851/ishares-sustainable-euro-corporate-bond-0-3yr-ucits-etf

Commodities
USO Crude Oil - iShares Oil & Gas Exploration & Production UCITS ETF
https://www.ishares.com/uk/individual/en/products/251909/ishares-oil-gas-exploration-production-ucits-etf
GLD Gold - iShares Physical Gold ETF
https://www.ishares.com/uk/individual/en/products/258441/ishares-physical-gold-etc-fund
SPGP - iShares Gold Producers UCITS ETF
https://www.ishares.com/uk/individual/en/products/251908/ishares-gold-producers-ucits-etf
iShares Physical Silver ETC
https://www.ishares.com/uk/individual/en/products/258443/ishares-physical-silver-etc-fund
iShares Physical Platinum ETC
https://www.ishares.com/uk/individual/en/products/258442/ishares-physical-platinum-etc-fund
iShares Physical Palladium ETC
https://www.ishares.com/uk/individual/en/products/256574/ishares-physical-palladium-etc-fund

Themes:
iShares Digitalisation UCITS ETF
https://www.ishares.com/uk/individual/en/products/284217/ishares-digitalisation-ucits-etf-usd-acc-fund
iShares Healthcare Innovation UCITS ETF
https://www.ishares.com/uk/individual/en/products/284216/ishares-healthcare-innovation-ucits-etf-usd-acc-fund
iShares Digital Security UCITS ETF
https://www.ishares.com/uk/individual/en/products/297843/ishares-digital-security-ucits-etf-fund

Scrooge_McCodf · May 7, 2020, 9:45am

Some cracking ETFs and info here @Team212, could they get added into the mix? Would really flesh out your ETFs and put you way ahead of the chasing pack.

(Well even further way ahead!)

adm · May 7, 2020, 9:50am

Cool.

So, it’s a global macro approach but using ETF’s.
I wonder how the performance would be in relation to a buy’n’hold ETF approach.
The late John Bogle and now Buffett advocate a buy’n’hold of index tracking assets. What’s your take on this ?

Nirnaeth · May 7, 2020, 10:07am

It follows the approach of a global hedge fund, but obviously on a much smaller scale. It aims to seek optimal upside, whilst protecting from downside.

At times stock picking can outperform it, but it seems to create a steady upward trend, and by following the economic cycle get you in the appropriate asset classes.

If I had followed the strategy, during the crash the portfolio would have been down 2%, as opposed to 30% for the market, which would have allowed me to shift into cash and then benefit from the bear market rally.

Am still working on it, backtesting, and fleshing it out with some others. It fundamentally different approach than stock picking, which is bottom up. This is top down, driven by the macro environment using an A/B test of (a) what you should be buying given the economic cycle and (b) what the market wants you to do buy at that specific moment. Both need to match up.

Nirnaeth · May 7, 2020, 10:35am

They are absolutely right - for the average retail investor.

Most people wouldn’t understand that we are in a deflationary environment now, however, so you have to match investing style with financial / economic literacy.

Buy and hold works for most, as long as you take a long enough time horizon. But what if you could avoid crashes like we seen recently, or at least be better prepared for it so you don’t lose 30% that year,?

Or what if you could expand your horizons and find the asset classes that perform well - whilst equities crashed, there has been a raging bull market in gold, USD and treasuries - equities are still down 16% YTD, gold, USD and Treasuries are up 10-20% YTD.

It depends on the degree of sophistication that you seek and the amount of time you can put in it. If one has little time and understand, but and hold I would advocate any given day. But if you seek more sophisticated approach, multi-asset with a Long/Short side may be right for you.

adm · May 7, 2020, 11:29am

Awesome.

One other question, will you short using the CFD platform and go long on ISA or Invest?
Or will it be inverse ETF vs long ETF ?

Also, which if any economic indicators will you be using the most?

Even though im following a buy’n’hold approach, I actually do think the method of global macro with a horizon of a few months to year, is the best approach for a diversified portfolio.

Nirnaeth · May 7, 2020, 11:50am

Going Long in the ISA and then Short using the CFD margin account to short stocks, ETFs and indices, as well as trade currencies.

The only thing missing is options unfortunately, so am opening an international account with TastyWorks for that.

The key economic indicators are Growth and Inflation. Both are decelerating now, so we are in a deflationary regime, most likely moving into an inflationary one later this year.

Over those two indicators you need to overlay Policy, as central bank intervention can distort markets as we see the Fed doing in the USA, or what happened in Japan the last decennia.

Here is how my work-in-progress dashboard looks like:

adm · May 7, 2020, 4:01pm

Killing it with that spreadsheet.

Scrooge_McCodf · May 8, 2020, 4:39pm

Any chance we could get this batch listed up? Would be killing it on the ETF front if you did!?

Nirnaeth · May 8, 2020, 5:17pm

Even with a few hours left the S&P 500 index had 31 million trades today, against an average of 177 million trades.

Stock markets are hitting serious resistance levels and the FAANGM that are driving it are running out of steam. With more and more dire economic news coming out, the markets may be at an inflection point.

It’d be good to provide alternative asset classes through the listed ETFs so people can rotate out of overbought stocks and safeguard their wealth.

Thank you.

Scrooge_McCodf · May 11, 2020, 9:29pm

Definitely need the Korea etf. Tricky to get exposure to Samsung in the UK at the moment without getting a lot of other crap with it! (Looking at you emerging market ETFs!)

topdrog88 · May 12, 2020, 12:23pm

This list of ETFs is great. It would be great if this was offered by T212. A lot of these are on my personal list.

datageek · May 13, 2020, 2:03pm

We need all of those! Trading212 do your miracle again!

Scrooge_McCodf · May 17, 2020, 10:32am

@David

Is this achievable? There’s some cracking ETFs in there.

Milesb85 · May 18, 2020, 1:39pm

Wow, great list. Would be great if they were added👍

topdrog88 · May 21, 2020, 8:14am

Any update on this request? It would be so useful!

slick_1 · May 27, 2020, 11:26am

Really keen to protect my assets and move away from having everything denominated in a single currency.

OP mentioned products would be great.

CaptainDangernoodle · June 3, 2020, 5:19pm

If this great addition is ever realised I’d love to hear your further explanations on the strategy @Nirnaeth
This macro approach is quite eyeopening to say the least

EquityInvestor · June 3, 2020, 8:42pm

I had not seen this post before, just seen it today. It sounds very interesting and something definitely to follow.
I am currently heavily liquid and gold (ETC). The gold has not done very well the last month… What are your thoughts?
It no longer looks like a typical bear market, even if it should be one.

Hopefully we will get these ETFs soon .

Nirnaeth · June 3, 2020, 8:48pm

I went temporarily out of gold, treasuries and minimum volatility.

All economic signs are for a continuing bear market, but irrational exuberance and the Fed pumping endless liquidity in have led to a market that is divorced from reality.

I do see signs that treasuries and gold are bottoming out, so may go back into them again. If COVID19 spikes you after reopening, or if Q2 earnings don’t get discounted in the market, we may see a downturn again, and it’s good to be positioned for that eventuality.

In stocks, tech, healthcare, and utilities are bullish, and within consumer stables a number of companies like Kroger, or CAG are bullish as well. That’s where my focus lies for now.

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Multi Asset ETFs

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