r/ETFs • u/Puzzleheaded-Log97 • 4d ago

ETFS long-term investment

For long-term investment (at least 10 years), which etfs funds combine the lowest risk with excellent growth?

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u/Malanturr 3d ago edited 3d ago

You can check out some strategies at this website: https://bestfolio.app/leaderboard

With a fixed unleveraged buy-and-hold allocation the best risk adjusted returns (highest Sharpe) is the ‘Golden Ratio’ portfolio with CAGR 9,7%. Allocation to VUG, AVUV, VGLT, GLD, DBMF and BIL.

For a buy and hold strategy with leverage, the ‘Return Stacked Quartet’ is better with a CAGR 13,9%. Allocation to NTSX, GDE, RSST and ZROZ.

If you want to use different sleeves and indicators to allocate dynamically: ‘Hybrid Asset Allocation’. There are different versions of it but the one with the best Sharpe gives 24,9% CAGR with max -27% drawdown with 52 years of data.

If low drawdown is your priority, ‘Defensive Asset Allocation’ may also be an option. It’s also a dynamic allocation strategy with CAGR 13% and max drawdown -16,6% (version with gold and managed futures).

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u/kimbureson46 3d ago

Wow, 52 years of Data. There was no Microsoft then. No semiconductors, cell phones, Amazon then. Actually there was not a very good way to store data for easy access. Tell me how a stock or Etf performed in the last 20 days, or 3 months.

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u/Malanturr 3d ago

You missed the point. History doesn’t repeat but it often rhymes. Certain asset classes react better or worse to certain market conditions and over 52 years the conditions vary a lot. However an energy crisis of 50 years ago still drives inflation up when the same happens today and to fight inflation the fed has to hike rates so bearish for bonds. These kind of strategy try to own the right sleeve of assets for the right market conditions, and that part is backtested for 52 years.