PanicMode @PanicMode: "Recently we have received questions..."

United Kingdom

Edited

Recently we have received questions about the @PanicMode CopyPortfolio. Please see the comments below that we hope will clarify some of the topics that have been raised. PanicMode, as the name suggests is a portfolio that is meant to tackle extreme market volatility. In most cases we expect the portfolio to gain in times where most indices and markets experience drawdowns. How: The portfolio is using short positions on several ETFs that represent the world's largest economies via their main exchanges ($SPY, $EWG and others). In addition, parts of the portfolio are allocated to assets that are seen as safe havens or alternatively, assets that are considered safer and see high demand during market drawdowns (Gold ($GLD), treasury bonds ($TLT) and others). Finally, the portfolio allocates a significant part in the $VXX. This instrument often termed as the "fear index," is a measure of expected price fluctuations in the S&P 500 Index options over the next 30 days. This combination results in an aggressive investment instrument that looks to gain in time of uncertainty and significant drawdowns across major markets and economies. Passive: This is a passive investment instrument. It has no active management or ongoing asset picking and is rebalanced yearly to reset the portfolio weights. Investors need to consider when is the right timing and how to apply this portfolio as part of their wider allocation and long term goals. This portfolio can be applied as a risk diversification over the long term or as a short term, strong impact allocation in highly volatile market scenarios. What has it done so far: Looking deeper into the portfolio performance demonstrates that the portfolio methodology and approach have proven themselves. Recently, during the COVID-19 derived financial crisis, capital markets witnessed one of the most volatile market environments in history followed by unprecedented market drawdowns. During this time, investors that had exposure to the PanicMode portfolio saw a YTD performance of 33%, while S&P500 finished at -5.42% over the same time. The Q1 2020 performance of the portfolio was 53.6%!!! Q4 of 2018 was the first time capital markets witnessed a bear market (by definition) since the 2008 financial crisis, while the PanicMode portfolio gained 17.51% through that quarter. This is the exact impact we looked for when planning this type of allocation. On the other hand, during April of this year, as most of the global economies began to take steps to get out of their self-imposed lockdowns, capital markets also began to see recoveries. In this market environment, we expect the portfolio to see drawdowns as it did. Having said that, the portfolio diversification in asset classes and geographies should allow lower drawdowns. Cost & Fees Please note- the portfolio incurs no management fees, however, it incorporates several short positions that by nature hold higher costs. This should be taken into consideration when looking into this allocation. We will also note that the portfolio performance as presented in the stats page or in your personal portfolio (in case you invested in it) includes these costs as part of the performance. Here you can read more about fees on eToro: www.etoro.com/trading/fees/. Thank you for considering and investing in this portfolio.

2 Mentioned

EWG

iShares MSCI Germany ETF

PanicMode