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We pursue and systematically implement a passive investment approach for your benefit. This means we stay clear of expensive investment products that aim to outperform the market. This is because several scientific studies have come to the conclusion that more cost-effective investment funds provide better returns on average than expensive ones (see for example the analysis by Nobel laureate William F. Sharpe, The Arithmetic of Active Management, Financial Analysts Journal, 1991). The deeper reason lies in what is known as market efficiency, which has been described by another Nobel Prize winner, Eugene Fama: In a liquid market, security prices fully reflect all available information.
For this reason, we mainly use ETFs, i.e., exchange-traded funds that track a market index. There are, however, more than three thousand ETFs on the market, not all of them suitable. We select the best ETFs for you. In doing so, we take account of not only the product costs, but also market liquidity and the counterparty risk associated with the structure of the ETF. Finally, we analyze how effectively the ETF tracks the market index (tracking error).
Once we have determined your risk profile on the basis of our online questionnaire, we recommend a globally diversified portfolio tailored to your situation. At True Wealth, we optimize your portfolio exactly towards your personal risk profile, it has to be a perfect match. You want more Swiss stocks? Or exclude commodities? No problem, our platform meets your requirements. But we do specify a framework to ensure that your portfolio always remains diversified and matches your risk appetite.
Since market movement causes your portfolio to stray from the ideal asset mix, we work to keep your portfolio on track. This means that we buy or sell the corresponding investment products for you to bring your portfolio back in line with your target asset mix. We don't do that too often, because each transaction will lower your return a little (although we deduct the trading commission from our asset management fee, a bid-ask spread is unavoidable). But we do so regularly, without your having to get involved. This is because, on the other hand, regular portfolio adjustments can generate additional returns, as prices often approach their multi-year average in the long term.
You want to invest additional funds? We will adjust your portfolio accordingly. Of course the same applies if you want to withdraw money.