Determinant portfolio: situation as of 01.01.2025

THE determining portfolio concludes this month of December with a slight drop of -0.25%. Despite this, it largely outperforms its reference index, the MSCI Switzerland, which plunges by -2.12%.

This allows the portfolio to show a nice performance of +20.3% in CHF over the year 2024. This result easily surpasses that of the Swiss market, which is stagnating at +4.4%.

Here is the detailed result of each strategy:

• Blue Chips: + 10%
• Micro Caps: +51.3%
• Tactical Asset Allocation: +32.5%
• Trading Auto Signal : +20.8%

I am not yet mentioning the performance of Swiss real estate, recently introduced. It is indeed premature to draw conclusions.

The performance of Blue Chips is satisfactory compared to the Swiss market, but appears somewhat disappointing in comparison with the other approaches. Since this autumn, the strategy has been redesigned to give it more dynamism. We will see what this gives in 2025. On the other hand, the results of the other approaches are excellent, and particularly those of Micro Caps, which are posting exceptional results.

To remain complete and transparent, it should be noted that although a gain of +20% over a year is undoubtedly an excellent result, the S&P 500 recorded a progression of +34% (in CHF) during the same period. It would therefore have been possible to obtain better performances, with less effort, by simply investing in a ETF such as SPY. The situation is similar with VT, although the latter has shown a lower return (+25%).

That said, you have to compare like with like. The associated risk levels are not at all similar. Investing your entire wealth in a single ETF and a single asset class presents a considerable risk. Such a strategy may seem acceptable with a small portfolio, but as it grows, diversification of assets becomes essential. This is particularly important for peace of mind and financial security, especially if you have to live off your capital.

As a result, the determining portfolio is based on strategies and assets with a low correlation with the market. This is particularly the case for Trading Auto Signal (0.4), Micro Caps (0.56), gold (0.0) and Swiss real estate (0.21). This approach helps to reduce the volatility, which in turn helps to optimize the portfolio's return/risk ratio.

To compare the determining portfolio, it must be compared with an allocation presenting similar risks, such as the famous "60/40", which we will explore soon in our series "The wallet war". This model consists of 60 % of stocks and 40 % of bonds.

Although it differs in its constitution, the 60/40 turns out to be very comparable to the determining portfolio in terms of risks:

• Their correlation with the market is 0.8, while that of VT is 0.96. That of SPY, of course, is equal to 1.
• Their volatility is around 10%, while that of the other two ETFs is higher than 15%.

To assess the performance of the 60/40 portfolio, I used the VT ETF (global equities), and CSBGC0 (intermediate-term Swiss Confederation bonds). In 2024, this combination generated a good return of +16.67% in CHF. However, this remains lower than the +20.3% obtained with the determining portfolio, with an equivalent risk.

Compared to MSCI Switzerland and the 60/40 portfolio (with international equities), the determining portfolio thus displays remarkable performance in 2024.

I take this opportunity to extend to you my most sincere wishes for the coming year.