How did the investment products do this year? We looked at the portfolio performance of products in our marketplace over the past 12 months to get a view of what our users have generated in returns over this period. This is because the thousands of users on Oval have realised that investment should not be considered just risky business but that continuous and methodical investing can over time bring great results.
Let's start by one consideration: the markets in the last 12 months did great! The S&P 500, a good indicator of the market movements, is at all time high. The last 12 months return from investing in this index was 32%.
If you look at the performance of S&P 500 over the past 20 years it shows that it is not always the case, some years bring huge losses, others bring moderate returns, 2019 overall was close to a record year.
So why is this important? Because in Oval we have decided to create products with different levels of risk to make sure that in a good market our users make money, but in a down market they do not lose as much. Most of our products, the ones with medium and low risk, have a mix of stocks and bonds.
The S&P 500 is an index of all stocks. This means that our products with only stocks, like Creative Thinking, will follow the performance of the S&P more closely. They will usually give higher returns but by having more risk will generate higher losses. Products like Protect Water on the other hand have a much lower volatility because they are only 30% equity, and the rest in bonds, that are safer investments as they do not change price as much, having a lower volatility, and give a fixed interest over time.
We have put together a table of the returns of the products on Oval for the past 12 months.
What we show is the return for the past 12 months, the risk level derived by the volatility and the return to risk ratio. Volatility is shown in % and shows the changes in the spikes in prices. The ratio is an indicator useful to evaluate the performance of the products. As shown in the table above, all products have a positive return to risk ratio, except for Yes We Can(nabis) and Race for Space. A risk-return ratio of 1 means that for every 1% of risk that you’re taking you expect to generate 1% of return, a risk return ratio of 2 means that for every 1% of risk you expect to generate 2% of return.
We compared the performance of our products with the standard market index for the countries of our investors, Italy and the UK to show how we did better than these markets on average.
Even more interesting we did not just look at the products performance, that assumes a user invests exactly 12 months ago and takes them out today, but the actual performance of all our users no matter what trade they did and when they entered or exited the market and especially if they continued to invest on a weekly recurring basis. This is especially important because we take into account that:
- Our users are not experts, but in the end they still obtained as a group a very strong performance
- The encouraged investment strategy on Oval is one of cost averaging, adding small amounts on a recurring basis in your investment portfolio. This generates a lower volatility (and lower returns) but makes the investment much safer over time.
Given these two topics in mind our average user made 7% in Euro and an incredible 15% in British Pounds. The surprising difference is given by two main factors, the performance of the British Pound currency compared to the Euro, and the fact we do not have high risk products like Yes We Can(nabis) and Race for Space in British Pounds.
Both performances are surprisingly high compared to many managed accounts in the market that have a much higher management fee and performances in the low single digits.
This information is going to bring a whole new era in Oval, as we focus on simplifying the investments even more and on educating a lot more of our users to invest, and to do this in a recurring and automatic way! Stay tuned.
Oval Money does not provide financial advice. If you need further information we suggest you look for expert advice.