Motif Investing constantly looks for trends, ideas and world events that could create an investment opportunity, and then picks 10 to 30 related stocks to build portfolios around, weighing them based on their exposure to the coinciding idea, event or trend.
Below is a brief look into a portfolio designed to track two times the inverse performance of the broader international stock market, by utilizing inverse leveraged country-specific ETFs.
The Bear International Market And Leveraged ETFs
The people behind this motif explained that leveraged ETFs are conceived to reach their investment objective on a daily basis and may not track an underlying index over an extended period of time.
They warn, however, that ETFs with Leveraged and Inverse strategies can accelerate the risk and volatility of an investment beyond that of a traditional ETF strategy. So, people who decide to invest in the Bear International Market motif should be aware of the unique risks involved.
Each Leveraged/Inverse ETF in the portfolio tracks a different investment objective and strategy. So, those responsible for the portfolio recommend reviewing each ETF's prospectus (objective and strategy) carefully before investing. Moreover, they advise investors to monitor closely the volatility of each ETF in the motif closely to determine how activity in the marketplace may be impacting the performance of the individual ETFs in portfolio as well as the overall performance of the motif.
Leveraged/Inverse ETFs may not be suitable for investors who plan to hold positions for longer than one trading session or who may not fully understand the impact of daily compounding of leveraged investment returns, and who may not actively monitor their positions throughout the trading day, they concluded.
Performance And Allocation
Over the past year, the Bear International Market motif has widely outperformed the market, delivering a 54.6 percent return, mainly driven by the 26.6 percent surge it experienced over the last month.
Source: Motif Investing
The portfolio allocates its assets to four U.S.-listed ETFs that track the inverse performance of relevant countries and regions within the global stock market. Allocation goes as follows:
- Brazil: ProShares UltraShort MSCI Brazil Capped (NYSE:BZQ) 29.9 percent
- China: ProShares UltraShort FTSE China 50 (NYSE:FXP) 27.9 percent
- Emerging Markets: ProShares UltraShrt Mrkt (ETF)(NYSEARCA:EEV) 25.5 percent
- Europe: ProShares UltraShort FTSE Europe ETF (NYSE:EPV) 16.7 percent
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