How Did Finax Perform in the Prosperous Year of 2024?

Some may find it cliché that I am once again opening this commentary with the thought that markets surprised us in many ways over the past year.

A year ago, few would have predicted that the stock market would repeat the excellent results of 2023. Many believed that stocks would stagnate throughout the year. According to the average forecast of Wall Street analysts, the S&P 500 index was expected to close the year at 4,861 points, indicating only a slight increase.

Several friends and clients confessed to me that they hesitated to start investing for this reason. Markets were at their peak, and they were worried that a downturn would come soon.

In our communications, we repeatedly pointed out that markets rarely decline immediately after reaching historic highs. Growth generally has some momentum, leading to further peaks following previous highs.

Throughout the year, this proved to be good advice. Global stock markets rose by nearly 20%. Encouragingly, this growth was primarily driven by economic expansion and rising corporate profits. You could no longer use the excuse that stock prices were rising due to central banks' money printing. Interest rates remained relatively high throughout the year in most parts of the world, especially in the U.S.

In this graph, you can see the performance of selected Finax portfolios since their inception. It clearly illustrates why you should never delay investing. During the market downturn in 2022, many people were afraid to invest. Then a sudden recovery followed, and they missed out on returns.

A year ago, many hesitated to invest again, as markets were at their peaks. This decision once again cost them returns. Do not let similar doubts deter you from investing.

The economy has been performing well in the long run, and corporate earnings are growing. For example, within the S&P 500 index, corporate profits continue to grow at a double-digit annual rate, and Europe is also reporting strong results. Do not postpone investing; it has never been easier to start.

How did Finax perform in this constructive environment? You can see for yourself down below.

If your savings are in a competing product, and you conclude that they would be better off with Finax, you can take advantage of our investment transfer discount. If you document the termination of an investment in a competing product, we will manage half of the transferred amount free of charge for two years.

Disclaimer on Provided Data: All data related to the performance of Finax portfolios represent the actual achieved performance of model portfolios. The method for calculating actual performance is described in our article How We Calculate the Actual Performance of Finax Portfolios? Past results do not guarantee future returns, and your investment outcome may result in a loss. Be sure to understand the risks associated with investing.

How Did We Prepare the Performance Tables?

We assign our products with an SRI risk indicator, as defined by European regulations. This number ranges from 1 to 7, with higher numbers indicating greater volatility and investment risk. Each table contains investment strategies with the same SRI level, hence having a comparable degree of risk.

Dynamic Strategies

Dynamic portfolios invest mainly in equities and carry a higher risk of fluctuations in value. They are therefore suitable for investing for longer periods, typically at least 7-10 years.

Over the past year, our dynamic strategies achieved after-fee returns in the range of 15% to 19%, significantly above the long-term average market performance. These are great result, but they might seem slightly less than the performance of some U.S. indexes, such as the S&P 500 or Nasdaq. This is because Finax portfolios also contain stocks from Europe and emerging markets (China, India, etc.), which achieved slightly weaker performance than the U.S. over the previous year.

Such diversification across multiple regions may result in short-term performance sacrifices in some years, but it is an excellent hedge in case American tech companies lose their dominance, allowing other sectors or regions to take the lead.

For instance, at the beginning of 2025, European companies have shown significantly stronger growth. The recent case of China's DeepSeek demonstrated that U.S. tech dominance is not guaranteed forever.

Moreover, we often stress that investment evaluation should not focus on a single year. A lot can happen in a year, and outperforming the global market often involves luck. Beating passive investments across the entire market is most difficult over longer periods, as consistently picking winning investments and avoiding mistakes is challenging. Since their launch in 2018, our dynamic portfolios have earned returns of roughly 7% - 10% per year, significantly enhancing the wealth of clients who held them over the entire period.

Balanced Strategies

Now, let's take a look at the results in the SRI 3 risk category. This category includes funds with various combinations of riskier stocks and safer bonds. Due to recent turbulences in the bond market (interest rate hikes in 2022 led to declines in their prices), this group also includes purely bond-focused strategies.

Due to the variety of included strategies, you will find a wide range of returns in the table below. The best gains in this category were delivered by the 70% stock portfolio, which rose by almost 14% over the past year, and more than 6% per year since its launch. 

Pure bond strategies remained mostly unchanged over the year. At the beginning of the year, they were broadly expected to receive support from interest rate decreases by the world's major central banks. However, this expectation did not materialize, especially in the U.S. As a result, their values remain in a long-term decline (initiated by rising interest rates in 2022). However, this means that their yields are still elevated, offering a potential for attractive returns over the next several years. One should not overlook this asset class purely based on recent performance.

Conservative Strategies

The SRI 2 category includes the Intelligent Wallet - our conservative portfolio suitable for storing short-term savings for 1 to 3 years.

Although the Intelligent Wallet was launched in 2021, it underwent significant changes at the end of 2023. Their goal was to reduce the portfolio's risk and better align it with the recommended 1-3-year horizon. Previously, it was too risky, causing its value to decline more than acceptable in 2022.

The Intelligent Wallet saw solid growth over the past year, reflecting short-term eurozone interest rates, which was the goal of its strategy adjustment.

One very positive takeaway from this table is that investing in bonds is by no means obsolete. Many wrote them off forever after declines in 2022. At Finax, we tried to highlight that these instruments finally offer higher returns, which could lead to interesting results in the coming years.

The table above confirms that even safer investments can now generate attractive returns. The Intelligent Wallet outperformed inflation in the European Union, which reached 2.7% in 2024.

Smart Deposit and European Pension

Traditionally, we also show the performance of our most conservative product, which is suitable for storing savings for very short periods, even for just a few months. The Smart Deposit falls into the SRI 1 risk category, meaning it is safer than all the portfolios we've shown so far. You can track its stable development in one of our transparent accounts.

In 2024, it earned 3.3% after fees. Its return reflects the interest rates set by the European Central Bank. Currently, it offers a gross return of 2.6% per year, which exceeds the average interest rates on term deposits while maintaining greater flexibility (you can withdraw the money at any time without penalty).

The European Pension (PEPP) is a pan-European 3rd pillar, which is becoming progressively more popular as an employee benefit. This product has a reduced fee: 0.74% including VAT annually. As a result, it achieves a slightly better performance than our other portfolios. In exchange, however, you generally cannot withdraw these savings before reaching retirement age, except in a few cases.

If you’d like your employer to start contributing to PEPP as a benefit, consider advocating for it within your company. If you help us introduce PEPP at your workplace, we’ll reward you generously. For each employee receiving regular company contributions, we’ll manage 500 euros of your investments free of charge. And if your company contributes for at least 50 employees, we’ll manage all your investments in Finax with no fees at all.

The data show that our investments are performing well in the current environment. We will continue to hear a lot of scary stories about possible declines, which will certainly come at some point in the future (a slight decline caused by Donald Trump's disruptive policies is actually occuring right now). Such events are an inseparable part of investing. They do not imply there is a mistake in your portfolio, instead being an inherent characteristic of its long-term behaviour. Don’t let such fears discourage you from investing, only optimists earn in the long run.

With Finax, you can start investing in just 10 minutes. Simply download our app and fill out a short questionnaire. We would be honored if you tried it with us.

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