Frequently Asked Questions

 

Vesrock helps to grow your wealth by providing an easily replicable ETF portfolio on a monthly basis.

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The two most important macro factors in investing are growth and inflation. Changes in their expectations are root causes of repositioning and thus money flows towards more attractive assets. This is creating trends because markets are not perfectly information-efficient (slow diffusion of information), herding behavior exists and the over-and-under reaction of investors additionally amplify movements.

Our investing approach uses those effects to allocate towards positive trends (absolute momentum) and their relative attractiveness (cross-sectional momentum). There is strong academic evidence for both effects in a broad range of assets and in different geographical markets.

In the final step, a sophisticated portfolio construction selects an attractive allocation in terms of risk and reward within the given risk budget.

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  • Only live traded ETF prices (close) are used.
  • Dividends are reinvested.
  • No use of leverage.
  • Transaction costs of 7 bps on the turnover are assumed.
  • Return on cash is equal to the 3-month US T-Bill.

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Only liquid ETFs with a narrow bid-ask spread are traded. The universe contains ETFs from equities indices, fixed income, commodities and real estate.

A broad range of asset classes are needed to find opportunities during various market regimes.

Some brokers offer commission-free trading in them.

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After a free subscription (here) you will receive an allocation suggestion at every month’s end. (example)

Use the percentage of the suggested allocation to bring your portfolio in line by selling or buying the corresponding ETFs.

Adjustments to your portfolio should be made within one trading day. It only takes about 10 minutes.

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The ETFs of the model portfolio are listed in the US and priced in US dollars.

Investors outside the US investing in those instruments are facing a currency risk. Your performance may be higher or lower depending on the currency fluctuations. There are ways to mitigate those risks (hedging) but may come with an additional cost.

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The target is to deliver an average annual return of 10 % over a full business cycle, with less risk, in terms of drawdown, than a balanced portfolio (50 % SPY, 50 % IEF).

However, there is no guarantee that these targets will be achieved.

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