Even if you don’t use exchange traded funds (ETFs) in your own portfolio, you can make use of our Top 50 ETF selection to build a passive benchmark. A good benchmark should be investable and representative of assets held, so following ETFs is ideal.
For our Alpha portfolios, we’ve used the Asset Risk Consultants (ARC) multi-asset benchmarks that correspond to the level of equity market risk we’d be prepared to take. The potentially riskier ‘Steady Growth’ (classified as 60-80 per cent of global equity risk) and the ‘Balanced’ (40-60 per cent) IC Alpha strategic asset allocations, based on the ARC benchmarks, are shown in the first two tables. While we’ve cribbed the asset weightings, the specific ETFs used to mimic them have been chosen by us. For the hedge fund allocation, we track the UBS HFRX Global Hedge Fund USD ETF, which doesn’t appear in the top 50 list. This is a more niche ETF and we’re not suggesting it as an investment; it’s there to give representation to hedge funds in our multi-asset benchmarks.
Alpha Balanced strategic asset allocation benchmark