News for hackers. Stuff that matters.

A comment on Robinhood now valued at $11.2B with new fund backing. Parent comment

Re:Robinhood now valued at $11.2B with new fund backing by atombender on Monday August 17, 2020 @06:19PM (#24192915)
The S&P isn't risk-free! The only risk-free asset is US Treasury bonds, because we assume US Treasury can't default on payments.

The goal of a robo advisor, for most people, is not to beat the S&P, but to balance risk and reward according to the individual's time horizon and risk profile without any manual intervention.

Beating the S&P is a fun game for people who want to spend time on it, but this isn't for the general populace.

If you want to beat the S&P and you're okay with above-average risk, but also want a completely hands-off approach, I would suggest 100% PSLDX [1]. It's a hybrid active/passive mutual fund that uses buy derivatives (futures and swaps), collateralized by bonds, to boost S&P returns. The high (1.01%) fee only looks high until you look at the returns; most years, it does 20-30%. Its return in 2019 was 52%. In theory, it should do only slightly worse than the S&P in a bad year.

Another interesting futures-based fund is NTSX [2]. It's pretty new, but it's consistently beat the S&P since inception, and did very well in the March dip.

[1] https://www.morningstar.com/funds/xnas/psldx/quote

[2] https://www.morningstar.com/etfs/arcx/ntsx/quote

[ Parent | on HN ]
Re:Robinhood now valued at $11.2B with new fund backing by tfehring on Tuesday August 18, 2020 @12:24AM (#24195246)
For what it's worth, I'd expect that leverage to come back to bite you in the ass in a rising interest rate environment. Granted, we haven't seen a sustained period of rising interest rates for 40+ years, but it's not obvious that that will continue.
[ Parent | on HN ]
Re:Robinhood now valued at $11.2B with new fund backing by nojito on Monday August 17, 2020 @07:52PM (#24193671)
A fund like psldx magnifies in both directions.

It’s easy to get enamored when the market is doing well.

[ Parent | on HN ]
Re:Robinhood now valued at $11.2B with new fund backing by atombender on Monday August 17, 2020 @10:38PM (#24194726)
I would say that PSLDX has proven itself. Max drawdown since inception (2008) is about the same as VFINX, less than VTIAX/VGTSX. Return in 2008 was -33%, compared to -37% for the S&P 500. In March, it dipped more than the S&P, but not terribly so. The only year it didn't significantly outperform the S&P was 2013.
[ Parent | on HN ]