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P2P investments, bonds and deposits build an optimal portfolio in 2024

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According to Robocash platform estimates, in 2024, the optimal solution will be to keep two-thirds of the investment portfolio in fixed-income instruments.

Robocash specialists analyzed 9 different investment assets to determine the optimal portfolio structure. The research examined 10 portfolio allocation models* and considered asset correlations.

The Black-Litterman model portfolio promises the highest returns in 2024 but suggests allocating all funds in crypto. “Of course, this approach contradicts the idea of diversification and significantly increases the risks of investments”. - the specialists comment. 

In conditions of economic instability, the trend towards portfolio diversification remains relevant. “Konno-Yamazaki and HRP algorithm methods suggest that we allocate all 9 analyzed assets into one portfolio. This approach mitigates some risks, but it is definitely not the most efficient in terms of returns”.

The most optimal option is the structure identified in the Pareto-optimization. Such a portfolio contains 64.9% of fixed income assets, namely bonds, P2P investments and deposits. The remaining part is made up of assets with variable return (30.6%) and foreign currency assets (4.5%). "The returns here are lower than, for example, in the case of maximizing diversification or considering a risk-free rate for the Sharpe ratio. But this combination is optimal in terms of achieving the best risk-return ratio." - the specialists add. 

* The list of methods included the following: Markowitz, VaR (Value at Risk), Mean-CVaR (Conditional VAR on average), Black-Letterman model, Sharpe-ratio, Risk and return parity, Robust optimization, Konno-Yamazaki (Mean Absolute Deviation), HRP (Hierarchical Risk Parity Machine Learning based optimization), Pareto risk minimization and profitability maximization.

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Notes for Editors: Robo.cash is a Croatia-based fully automated investment platform with a buyback guarantee on investments operating within the European Union, the UK and Switzerland. Launched in February 2017, the platform belongs to the financial holding UnaFinancial that provides fintech services across emerging markets in Asia and Europe. As a part of the holding, Robo.cash works according to a “peer-to-portfolio” model providing an opportunity to invest in consumer and commercial loans issued by the affiliated companies. As of November 30, 2023, it has attracted over €85M of investments and funded over €750 M worth of loans. 

Photo by Stephen Dawson on Unsplash

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