Why are past returns not an indicator of future returns?
The investment strategies optimised and recommended by True Wealth are broadly diversified and take into account various asset classes such as equities, bonds, real estate, cash and commodities.
This means that we do not focus only on those asset classes or regions that have outperformed others in recent years. Unlike some of our competitors, we therefore use ETFs and index funds on both equities and real estate equities or (real estate funds) and, depending on the client's risk profile and investment preference, commodities as well.
It would be easy to compile a portfolio only from the winners of the past. From a visual point of view, this would be tempting, as such a strategy would have better historical returns than a diversified portfolio focused on the future.
Historically, however, the winners of the past are often the losers of the future and vice versa. The explanation lies in the fact that liquid capital markets are almost always very efficient and all publicly available information is already priced into the price of securities, including in particular the view in the rear-view mirror.
That is why our True Wealth-optimised investment strategies are geared towards the future.