MIMS – Diversified Passive Selection Fund (Report April 2020)

The Diversified Passive Selection Fund is composed by a range of Exchange Traded Funds selected by Minerva Investment Management Society. These ETFs aim to replicate as closely as possible the performance of a basket of securities with specific common properties, thus being effective instruments for investors who wish to express a certain view on industry sectors or economic trends whilst capturing as little idiosyncratic risk as possible. This Fund therefore combines ETFs that when placed together reflect the global forecasts of the Fund management team.

Each of these ETFs was carefully chosen in line with the recent macroeconomic outlook, taking into account their ability to track their respective benchmark indexes. Diversification was a key element of the selection process and is reflected both into the asset and geographical allocation.

Finally, taking into account our commitment to build a realistic portfolio, we strived to make a proper balance between expense ratios, volatility and tracking errors to improve our probability of achieving a satisfactory overall risk-adjusted performance in these particularly volatile times. To that end, we attributed more weight to debt with respect to equities, focused on quality investments and included a “safe gold” ETF as this commodity tends to react less poorly to exogenous shocks such as the one the world economy is now facing.