Equity investment and performance
Looking at the long-term performance of the major stock markets, you will find that major equity indices like the Dow Jones or the German DAX have achieved an average annual return over decades of approximately 10 % per year.
How do we measure the success of an equity investment? We look at the long-term performance compared to the corresponding stock market index. In the long term, only 10% of investment funds and asset managers were able to beat their benchmark. This is certainly one of the reasons why index funds are gaining in popularity. Today, institutional investors are the largest investors in index funds.
How to outperform the index
Many investors think that an “expert“ is able to predict market movements and thus can react in time to avoid losses (market timing). In practice, however, there is hardly anyone who is consistently able to predict movements. Large price movements usually occur without warning.
Most successful investment managers use a disciplined, well-defined strategy. They do not let short-term concerns about the market take over: More important than “market timing” are stock selection and diversification.
Our preferred value-oriented stock strategies often show their qualities in underperforming stock market periods: The market often adjusts the soaring prices of trendy stock in dramatic price collapses than it does lower valued stock with higher dividend yields, which is what we mainly use in our strategies.
Exchange Traded Funds (ETFs)
ETFs are a simple and inexpensive method to mirror the performance of equity indices, investment sectors and themes. A detailed description of ETFs can be found here..
The highest yielding stocks of an equity index are selected. Periodically, the portfolio must be readjusted.
Meanwhile, there are also a variety of ETFs that invest based on this simple strategy.
GFS Managed Accounts
Unlike mutual funds or structured products GFS Managed Accounts (minimum account size $100,000) offers our clients the benefits of an individually managed securities account: direct stock ownership, professional management and complete transparency with respect to transaction costs.
Through our partnership with National Financial Services, our clients have access to institutional U.S. investment managers. Outside of this platform these managers are usually only available for investments of US$ 5 million or more.
All portfolios within one investment approach look alike: The $100,000 account of a private investor shows the same positions as the $100 million portfolio of a corporate pension fund.
Please note our Disclaimer.