Twenty20 Growth iBasket
iBasket X-Ray
Precision Risk Control
Asset Allocation

The bubble chart below shows the returns over a one-year period against the volatility over the same period for the different ETFs in the iBasket.
Risk Indicators
ETFS Physical Gold iShares Global High Yield Corp Bond GBP Hedged UCITS ETF iShares £ Corporate Bond 1-5yr UCITS ETF Lyxor FTSE Actuaries UK Gilts 0-5Y Amundi ETF MSCI Eastern Europe ex Russia iShares Core MSCI Emerging Markets IMI UCITS ETF iShares MSCI Pacific ex Japan UCITS ETF (Acc) db x-trackers JPX-Nikkei 400 GDP hedged UCITS ETF db x-trackers MSCI Nordic Index UCITS ETF iShares EURO STOXX Mid UCITS ETF db x-trackers MSCI EMU Index UCITS ETF (DR) 1D SPDR Russell 2000 U.S. Small Cap UCITS ETF Vanguard S&P 500 Cash - Sterling
Risk Indicators

A heightened risk in the markets is often a sign of a subsequent downturn in the economy. If the risk in the markets is high, one tends to reduce the exposure to risky assets in the portfolio and increase the exposure to safer assets like government and inflation-linked bonds. The higher the risk level, the higher the scorecard for any of the safer, low risk ETFs and vice-versa for the more risky ETFs.

A level of around 20% for the VIX and the VSTOXX can be seen as a neutral risk level. Values lower than that are considered as low risk. During the global financial crisis the values of the VIX and the VSTOXX went up to 81% and 88%, respectively. While the level of the VIX and the VSTOXX gives a good indication of the current riskiness in the markets, one also looks at the current trend in these values to determine whether the riskiness is increasing or decreasing.
TickerTickerTERAsset ClassSub-Asset ClassRegion
Cash - SterlingCash_GBP0CashGBP CashEurope
ETFS Physical GoldPHAU39CommodityPrecious MetalsGlobal
db x-trackers MSCI EMU Index UCITS ETF (DR) 1DXD5E15EquityBlend - Large CapEurope
Vanguard S&P 500VUSA7EquityCountryNorth America
iShares Core MSCI Emerging Markets IMI UCITS ETFEIMI25EquityEmerging Market EquityEM-Global
db x-trackers JPX-Nikkei 400 GDP hedged UCITS ETFXDNG30EquityJapanJapan
db x-trackers MSCI Nordic Index UCITS ETFXDN030EquityNordic RegionNordic Region
iShares MSCI Pacific ex Japan UCITS ETF (Acc)CPJ120EquityPacific ex JapanAsia Pacific
iShares EURO STOXX Mid UCITS ETFDJMC40EquityRegionEurope
Amundi ETF MSCI Eastern Europe ex RussiaCE920EquityRegion Fund-Eastern EuropeanEastern European
SPDR Russell 2000 U.S. Small Cap UCITS ETFR2SC30EquitySmall CapUnited States
Lyxor FTSE Actuaries UK Gilts 0-5YGIL57Fixed IncomeGovernment Bond - UKEurope
iShares Global High Yield Corp Bond GBP Hedged UCITS ETFGHYS55Fixed IncomeHigh Yield BondsGlobal
iShares £ Corporate Bond 1-5yr UCITS ETFIS1520Fixed IncomeInvestment Grade BondsEurope
Macro-Economic Indicators
We believe that an evidence based approach to portfolio construction is the best framework by which to seek enhanced returns under a backdrop of ever changing economic conditions. One technique we use is to screen the potential ETFs in a portfolio according to the prevailing macro-economic conditions and other leading market indicators. Of particular interest are the OECD and PMI data published monrthly, along with the VIX and VSTOXX.
Rates Indicators
To identify the best opportunities across various fixed income sub-asset classes we look at the level and slope of the Sterling, Dollar and Euro yield curves. An indication whether the yield curve at a similar maturity point is tending to increase or decrease can be a good sign for future movements in government and corporate bond prices.
Credit Indicators
For investment-grade and high yield corporate bonds the level and trend of the credit spreads in the corresponding markets in Europe, the US and Emerging markets is used as an indication of whether the corresponding bond prices will move up or down.

The Benefits of Double Diversification
The double diversication properties of a portfolio of ETFs is a key aspect of our portfolio construction process. An ETF itself is diversified. For example the FTSE 100 has no idiosyncratic risk - if one company were to go down by 50%, the FTSE 100 would, all else being constant, on average only be down by 0.5%. A portfolio of ETFs is doubly diversified as we take into account the correlation properties of the different ETFs. Assets that are low or negatively correlated with each other allow one to build portfolios with lower risk for the same level of returns - or larger returns for the same level of risk.
Asset x Asset - Correlation over full period VUSAR2SCXD5EDJMCXDN0XDNGCPJ1EIMICE9GIL5IS15GHYSPHAU
Vanguard S&P 500VUSA10.920.730.770.810.490.740.730.58-0.140.160.46-0.02
SPDR Russell 2000 U.S. Small Cap UCITS ETFR2SC0.9210.70.730.760.520.690.690.56-0.20.120.5-0.05
db x-trackers MSCI EMU Index UCITS ETF (DR) 1DXD5E0.730.710.880.840.520.720.720.74-0.190.230.51-0.09
iShares EURO STOXX Mid UCITS ETFDJMC0.770.730.8810.920.540.770.790.78-0.220.350.61-0.02
db x-trackers MSCI Nordic Index UCITS ETFXDN00.810.760.840.9210.550.820.840.78-0.20.270.580.01
db x-trackers JPX-Nikkei 400 GDP hedged UCITS ETFXDNG0.490.520.520.540.5510.530.520.44-0.470.10.49-0.28
iShares MSCI Pacific ex Japan UCITS ETF (Acc)CPJ10.740.690.720.770.820.5310.920.73-0.140.310.630.16
iShares Core MSCI Emerging Markets IMI UCITS ETFEIMI0.730.690.720.790.840.520.9210.8-0.150.280.630.2
Amundi ETF MSCI Eastern Europe ex RussiaCE90.580.560.740.780.780.440.730.81-0.20.320.530.07
Lyxor FTSE Actuaries UK Gilts 0-5YGIL5-0.14-0.2-0.19-0.22-0.2-0.47-0.14-0.15-0.210.24-0.350.37
iShares £ Corporate Bond 1-5yr UCITS ETFIS150.160.120.230.350.270.10.310.280.320.2410.470.07
iShares Global High Yield Corp Bond GBP Hedged UCITS ETFGHYS0.460.50.510.610.580.490.630.630.53-0.350.471-0.06
ETFS Physical GoldPHAU-0.02-0.05-0.09-0.020.01-0.280.160.20.070.370.07-0.061
Source: Bloomberg as of 30 Nov 2017

There is no warranty for the accuracy, completeness, and correctness of the information included in the charts and tables displayed above.

This analysis is for research purposes only under such circumstances as may be permitted by applicable law. It should not be considered investment advice and has no regard to the specific investment objectives, financial situation or particular needs of any specific recipient