Since its establishment in 2016, Easyvest has been offering potential clients an audit of their existing portfolio. The goal? Compare the fees and performance to an equivalent index portfolio in terms of risk, as proposed by Easyvest. Out of the 110 audits conducted in 2023, it appears that the annual performance of Easyvest's index approach is on average 2% higher than that of other players.
In 2023, over 100 investors entrusted us with the management report of a portfolio handled by a private bank or Belgian wealth manager for an audit. We analyzed the risk, fees, historical performance of the last 5 years, and the potential opportunity cost of these portfolios managed by other institutions. These elements were compared with an index approach similar in terms of risk, as proposed by Easyvest. The results of these audits, both individual and aggregated, are astonishing.
What stands out is that the vast majority of studied portfolios would have delivered better performance with Easyvest's index approach. With a 90% better performance rate, it's probably not a matter of chance: the index approach advocated by Easyvest seems to have offered better long-term returns compared to the active approach proposed by most traditional and private banks in Belgium.
Examined over 5-year periods, the audited portfolios achieved an average total performance of 14% with their respective managers, equivalent to 2,5% per year. Invested according to Easyvest's index approach, these same portfolios would have delivered an average total performance of 25%, or 4,5% per year. The performance differential represents an additional average return of +2% per year for Easyvest's index approach.
We continually emphasize: the impact of fees on the return of an investment portfolio is considerable. And at this level too, the audit results are unequivocal. On average, the portfolios of traditional institutions studied practice fees of 1,6% per year, compared to 0,8% for an index portfolio following Easyvest's approach, including tracker fees. This substantial and recurring fee difference is one of the factors contributing to widening the gap in long-term performance.
Our audits reveal an average initial portfolio of €280.000. Clients participating in this exercise have a certain wealth, for whom fees and opportunity cost represent substantial amounts, especially in the long run. The estimated opportunity cost over 5 years for the studied investors averages around €40.000, equivalent to the price of an electric car.
We will continue to conduct audits and refine the results obtained. Meanwhile, it is already quite clear that in the vast majority of cases, additional fees charged for active management did not lead to superior performance. By investing in the long term in global equity and eurozone bond ETFs, you maximize your chances of positive long-term returns while minimizing fees.
Do you have an investment portfolio in Belgium? If history is a good advisor, there is more than a 90% chance that your performance would have been better with Easyvest's index approach. To be sure, send us a management report, and we will provide you with an audit within 24 hours, similar to those studied in this blog. If you are not yet an investor, perform a simulation on our website and discover your potential return without delay.