There are plenty of ETF savings plans out there. Products tracking standard indices such as the DAX or the MSCI World are especially in demand. But quirion's ETF savings plans have a few decisive extras to offer over these.
Among investment products, ETF savings plans are clearly one of the success stories. This is borne out by data from the specialist portal extraETF, which brings together figures from several banks. According to this, in January 2014 only around 86,000 ETF savings plans had been set up at the participating institutions. By October 2022, there were more than 3.6 million.
The success of ETF savings plans isn't really that surprising. Securities savings plans like these open up, in particular, the return opportunities of the stock markets for building wealth. At the same time, ETFs are much cheaper than actively managed funds. And compared with investing directly in individual stocks, the risk is nevertheless spread across several holdings. Even on this point, however, big differences among ETF savings plans stand out. With a savings plan on the DAX 40, the product concentrates on precisely 40 stocks of the German equity market. With an ETF on the MSCI World, by contrast, you get a stake in around 1,500 stocks from 23 countries.
By comparison, quirion's ETF savings plans move into entirely different dimensions. quirion's global portfolio, for instance, contains around 8,000 stocks from more than 70 countries.
From product to investment strategy
As a digital asset manager, quirion's approach is quite different from that of an ETF provider or a platform for distributing products. quirion's goal is to achieve, through a special combination of ETFs, the best possible balance of return and risk when investing, as cost-efficiently as possible. And to do so for the widest range of risk appetites.
The starting point is the idea that, while ETFs are a low-cost and practical investment instrument, a single product does not yet amount to an investment strategy. Individual ETFs on standard indices generally leave out certain sources of return or weight them only lightly. Others receive an overweight, which entails additional risks. The fairly broadly based MSCI World, for example, is very heavily invested in US stocks but contains no smaller companies (small caps). What's more: even among ETFs on the same stock market index, there are sometimes larger differences in ongoing product costs and in quality.
In selecting and combining the ETFs, which is monitored continuously and readjusted where necessary, quirion draws on the findings of capital market research. The investment strategists have constructed a global portfolio that brings the "global equity market" and the return factors relevant to it into clients' portfolios. Because the global economy is geared toward growth over the long term. That is the reason why stock markets rise over the long term and on average. But because pure equity investments aren't suitable for everyone, quirion mixes in between ten and 90 percent bonds, depending on your personal profile. In total, that gives you ten variants. And another ten for the sustainable portfolio, which in selecting the ETFs additionally takes sustainability criteria into account.
Full participation with every savings installment
ETF savings plans on the global and the sustainable portfolio are available from €25 a month. The costs in each case are 0.04 percent per month, or 0.48 percent per year.
No matter which savings installment you choose: the savings plans give investors a stake in the entire portfolio. quirion's systems calculate what proportions of the various ETFs your individual portfolio should hold according to the intended strategy. With savings plans, these are often fractions, down to ten-thousandths of a share.
With every savings installment, so-called rebalancing is also carried out automatically. This is important because, with market movements, the weightings in the portfolio gradually shift over time. Now new: from now on, a full adjustment for fluctuations in value is carried out with every top-up, and thus with every savings installment. So that the portfolio doesn't deviate from the investor's risk-return profile for any length of time, positions that have performed above average are reduced. Others are bought back so that the proportions once again match the profile.
Harnessing the cost-average and compound-interest effects
As with securities savings plans in general, quirion's ETF savings plan also benefits from the cost-average effect. This means that more shares are bought when prices are low, and fewer when prices are high. Over time, this can lead to favorable average costs. The compound-interest effect also helps in building wealth: earnings are reinvested straight away and likewise contribute to the overall return. Over the long term, this is an enormous lever for building wealth.
Further levers are the size of the monthly savings installment and the investment period. If, as a first step, you want to estimate what savings amounts and time frames it would take to reach certain investment goals, you can use our savings-plan calculator. But whatever savings amount you decide on in the end: every one of them is suitable for starting to build wealth.
