In every strategy’s description, the variable rate of return, as opposed to a fixed rate on uninvested cash, will be displayed.
This variable rate is calculated as a weighted sum of the expected returns on the assets that make up the strategy, minus all fees. However, the rate on uninvested funds, including when they are part of the strategy, remains fixed. The formula looks as follows:
Y_{i} - Weighted Yield To Maturity — An estimate of the total rate of return for an investor who holds the asset to maturity and receives all interest and the capital redemption. The asset consists of bonds, each of which has a defined yield to maturity. With this yield to maturity for each bond, we calculate an indicator for the entire asset.
Weight_{i} - The weight of an instrument within a strategy which corresponds to its allocation within the portfolio.
Fx_i - The exchange rate of the corresponding currency to EUR. Will always be equal to 1 for assets denominated in EUR.
Service Fee - An annual fee which depends on the currently chosen plan.
Here’s an example for a Basic plan (1% service fee applies) with a balanced strategy with the following asset allocation:
Asset | Rate type | Rate | Allocation |
Euro | Fixed | 2.83% | 40% |
iShares Core € Corp Bond UCITS ETF | Variable | 3% | 10% |
iShares Global High Yield Corp Bond UCITS ETF | Variable | 5.9% | 50% |
According to the formula, the target interest rate is calculated as follows:
Please note this is an investment product, and investing always bears risks. To understand the risks, please refer to our Risk Disclosure Document.