THEMATIC (Wide Moat, Energy Security, Decentralised Store of Value)
Title: A Diversified Portfolio Strategy for the 21st Century: Embracing Technological, Economic, and Energy Security
Abstract:
This thesis examines a portfolio strategy that allocates one-third of its assets to Apple Inc. (AAPL) and Alibaba Group (BABA), each based on their strong competitive advantages or "moats" in technology and e-commerce sectors respectively. The remaining one-third of the portfolio is divided between Exxon Mobil Corporation (XOM) and Bitcoin (BTC), considering their roles in energy security and decentralized financial systems. Through a comprehensive analysis of each component, this thesis will demonstrate the benefits of a diversified portfolio that leverages the strengths of these four assets in the 21st century.
I. Introduction A. The Importance of Diversification B. Overview of the Four Portfolio Components
II. Apple Inc. (AAPL): A Strong Moat in the Technology Sector A. Historical Performance and Growth B. Competitive Advantages 1. Brand Recognition and Loyalty 2. Ecosystem and Network Effects 3. Innovation and Intellectual Property C. Risks and Challenges D. Future Outlook
III. Alibaba Group (BABA): The Dominant Moat in Chinese E-commerce and Cloud Computing A. Overview of Alibaba's Business Model B. E-commerce and Retail 1. Market Dominance in China 2. Expansion into International Markets C. Cloud Computing and Digital Infrastructure 1. Growth Potential in Cloud Services 2. Competitive Advantages in China D. Risks and Challenges E. Future Outlook
IV. Exxon Mobil Corporation (XOM): Energy Security in the Portfolio A. Importance of Energy Security B. XOM's Role in the Global Energy Market 1. Diversification of Energy Sources 2. Investments in Renewable Energy C. Risks and Challenges D. Future Outlook
V. Bitcoin (BTC): A Decentralized and Permissionless Store of Value A. Overview of Bitcoin's Properties B. Decentralization and Security 1. Blockchain Technology 2. Network Effects C. Store of Value and Hedge Against Inflation D. Risks and Challenges E. Future Outlook
VI. Portfolio Construction and Management A. Asset Allocation Strategy B. Risk Management C. Performance Evaluation
VII. Conclusion A. Summary of Findings B. Implications for Investors C. Future Research Directions
Asset Allocation
| Position | Category/Sector | Weight |
|---|---|---|
BTC-USD Bitcoin | 20% | |
AAPL Apple Inc. | Technology | 30% |
BABA Alibaba Group Holding Limited | Consumer Cyclical | 30% |
XOM Exxon Mobil Corporation | Energy | 20% |
Performance
The chart shows the growth of an initial investment of $10,000 in THEMATIC (Wide Moat, Energy Security, Decentralised Store of Value), comparing it to the performance of the S&P 500 index or another benchmark. All prices have been adjusted for splits and dividends. The portfolio is rebalanced Quarterly
Returns
As of Jun 2, 2023, the THEMATIC (Wide Moat, Energy Security, Decentralised Store of Value) returned 21.36% Year-To-Date and 20.86% of annualized return in the last 10 years.
| 1 month | Year-To-Date | 6 months | 1 year | 5 years (annualized) | 10 years (annualized) | |
|---|---|---|---|---|---|---|
| Benchmark | 2.46% | 9.94% | 3.54% | 2.92% | 6.18% | 6.06% |
| THEMATIC (Wide Moat, Energy Security, Decentralised Store of Value) | 0.50% | 21.36% | 17.24% | 10.52% | 15.00% | 20.86% |
| Portfolio components: | ||||||
AAPL Apple Inc. | 7.00% | 39.01% | 21.78% | 21.82% | 20.94% | 17.91% |
BABA Alibaba Group Holding Limited | 1.80% | -5.78% | -3.42% | -11.12% | -11.70% | -0.97% |
XOM Exxon Mobil Corporation | -5.31% | -4.75% | -5.18% | 9.32% | 7.04% | 3.67% |
BTC-USD Bitcoin | -6.49% | 62.08% | 58.07% | -10.10% | 18.93% | 39.74% |
| Returns over 1 year are annualized | ||||||
Asset Correlations Table
| BTC-USD | XOM | BABA | AAPL | |
|---|---|---|---|---|
| BTC-USD | 1.00 | 0.05 | 0.07 | 0.12 |
| XOM | 0.05 | 1.00 | 0.22 | 0.26 |
| BABA | 0.07 | 0.22 | 1.00 | 0.34 |
| AAPL | 0.12 | 0.26 | 0.34 | 1.00 |
Dividend yield
THEMATIC (Wide Moat, Energy Security, Decentralised Store of Value) granted a 1.27% dividend yield in the last twelve months.
| TTM | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | 2016 | 2015 | 2014 | 2013 | 2012 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| THEMATIC (Wide Moat, Energy Security, Decentralised Store of Value) | 1.27% | 0.87% | 1.35% | 2.08% | 1.51% | 1.76% | 1.43% | 1.53% | 1.68% | 1.42% | 1.45% | 1.13% |
| Portfolio components: | ||||||||||||
AAPL Apple Inc. | 0.77% | 0.70% | 0.49% | 0.62% | 1.06% | 1.86% | 1.53% | 2.06% | 2.11% | 1.86% | 2.39% | 1.16% |
BABA Alibaba Group Holding Limited | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% |
XOM Exxon Mobil Corporation | 5.20% | 3.27% | 6.03% | 9.47% | 5.96% | 6.01% | 4.84% | 4.53% | 5.25% | 4.29% | 3.67% | 3.91% |
BTC-USD Bitcoin | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% |
Expense Ratio
The THEMATIC (Wide Moat, Energy Security, Decentralised Store of Value) has an expense ratio of 0.00%, indicating no management fees are charged. Below you can find the expense ratios of portfolio funds side-by-side and effortlessly compare their relative costs.
Risk-Adjusted Performance
This table presents a comparison of risk-adjusted performance metrics for positions. Risk-adjusted metrics are performance indicators that assess an investment's returns in relation to its risk, enabling a more accurate comparison of different investment options.
| Sharpe ratio | Sortino ratio | Omega ratio | Calmar ratio | Ulcer Index | |
|---|---|---|---|---|---|
AAPL Apple Inc. | 0.69 | ||||
BABA Alibaba Group Holding Limited | -0.23 | ||||
XOM Exxon Mobil Corporation | 0.35 | ||||
BTC-USD Bitcoin | 0.92 |
Drawdowns Chart
The Drawdowns chart displays portfolio losses from any high point along the way.
Worst Drawdowns
The table below shows the maximum drawdowns of the THEMATIC (Wide Moat, Energy Security, Decentralised Store of Value). A maximum drawdown is an indicator of risk. It shows a reduction in portfolio value from its maximum due to a series of losing trades.
The maximum drawdown since January 2010 for the THEMATIC (Wide Moat, Energy Security, Decentralised Store of Value) is 42.66%, recorded on Jan 3, 2019. It took 174 trading sessions for the portfolio to recover.
Depth | Start | To Bottom | Bottom | To Recover | End | Total |
|---|---|---|---|---|---|---|
| -42.66% | Dec 17, 2017 | 383 | Jan 3, 2019 | 174 | Jun 26, 2019 | 557 |
| -33.79% | Oct 21, 2021 | 385 | Nov 9, 2022 | — | — | — |
| -33.67% | Feb 13, 2020 | 33 | Mar 16, 2020 | 114 | Jul 8, 2020 | 147 |
| -31.55% | Nov 13, 2014 | 285 | Aug 24, 2015 | 293 | Jun 12, 2016 | 578 |
| -15.43% | Apr 16, 2021 | 159 | Sep 21, 2021 | 28 | Oct 19, 2021 | 187 |
Volatility Chart
The current THEMATIC (Wide Moat, Energy Security, Decentralised Store of Value) volatility is 3.84%, representing the average percentage change in the investments's value, either up or down over the past month. The chart below shows the rolling one-month volatility.