Diversification means spreading your capital across different assets, which may help reduce risk and stabilize returns. Different asset classes often move in opposite directions: when one falls, another may rise. Diversification can take place both across asset classes (e.g., stocks and bonds) and within each class (different sectors or securities). Note that diversification does not guarantee profits or protect against losses.

They are exchange-traded instruments with low costs that make market access easier.

• ETF (Exchange-Traded Fund): funds that track a stock or bond index, offering broad diversification.
• ETC (Exchange-Traded Commodity): instruments that allow you to invest in commodities (gold, oil, wheat), adding commodity exposure to the portfolio.

• Distributing ETFs: periodically pay dividends or bond coupons to investors.
• Accumulating ETFs: automatically reinvest profits within the fund, increasing the value of the shares.
• ETCs on commodities don't generate cash flows (like dividends or coupons), so they cannot distribute or reinvest proceeds.

PharosFolio® uses a simple model built on three asset classes: global equities, Eurozone government bonds, and gold. This combination balances growth, stability, and protection while keeping costs low and avoiding unnecessary complexity. Other asset classes, such as real estate or cryptocurrencies, were deliberately excluded, as they would increase costs and complexity without delivering clear benefits for most investors.

Accumulating ETFs automatically reinvest any distributions, which can make them an efficient solution for long-term growth in many cases, but the best choice depends on each investor's personal situation and local tax rules.

Rebalancing is a periodic adjustment that brings the portfolio back to its target asset allocation, which may help manage risk and returns.

• Classic rebalancing: assigns fixed percentages to each asset (e.g., 60% stocks, 35% bonds, 5% gold), without adapting to market changes. When you rebalance, you restore these exact percentages.
• Dynamic rebalancing (PharosFolio®): updates target allocations based on risk signals and market conditions, which historically showed potential to reduce volatility during market stress.

With PharosFolio® you can simulate both approaches. Our dynamic rebalancing method uses a proprietary risk management model designed to explore the balance between risk and return. Past performance does not guarantee future results.

The key difference is what each approach rebalances to:

• Fixed 60/40 Allocation: You choose a static mix (60% stocks, 40% bonds) and rebalance periodically to restore those exact percentages, regardless of market conditions.
• PharosFolio® Adaptive Rebalancing: The target allocation changes based on risk signals from our proprietary model. During periods of higher market stress, the model historically adjusted to more conservative allocations; during calmer periods, it allowed for more growth-oriented positions.

Important: PharosFolio® adaptive rebalancing is not market timing. It doesn't try to predict short-term price movements or tell you when to buy or sell. Instead, it systematically adjusts the target portfolio mix based on quantitative risk signals. Both approaches require staying invested and rebalancing periodically—the difference is in the intelligence behind the allocation decision.

Past performance does not guarantee future results. These simulations are for educational purposes only.

Many studies show that trying to time the market is difficult and can increase trading costs and stress. PharosFolio® is built around the idea of staying invested with a diversified portfolio and looking at periodic rebalancing in the simulations, rather than trying to guess short-term market movements.

The tool shows how different rebalancing choices would have behaved in past markets; it does not try to predict or time future moves, and it does not tell you when to buy or sell.

General-purpose chatbots generate broad market commentary. PharosFolio® simulations run on real market data and let you test allocations, rebalancing rules, and risk bands that match your goals. We surface analytics (returns, volatility, drawdown, user plan context) that a chatbot doesn't provide. Always use PharosFolio®—like any planning tool—as one input to your own due diligence; it doesn't replace tailored financial advice and cannot tell you what to buy.

A portfolio simulator helps test investment strategies without risking real money. It lets you explore how different asset allocations might have performed historically, compare risk and return profiles, and understand various approaches. PharosFolio® uses a proprietary risk management methodology applied to a three-asset model (global equities, Eurozone government bonds, and gold) across 5 predefined risk levels. The simulator shows how these portfolios would have behaved in the past based on historical data, providing educational insights. This does not constitute investment advice, and users should consult qualified financial advisors before making investment decisions.

Simulations provide a theoretical reconstruction of how a portfolio would have behaved in the past under ideal conditions, based on historical data. In reality, portfolios may behave slightly differently due to factors such as price changes, transaction costs, or market liquidity. Results should therefore be viewed as qualitative guidelines, useful for exploring scenarios and understanding possible risk/return profiles.

PharosFolio® uses both fund data and index data to build longer histories.

When a fund has no data for older periods, the simulator fills the gap using the index it tracks.

Index data are an "ideal" benchmark, so when you compare two funds on the same index, the more recent fund (with more index backfill in its history) can appear to have better simulated performance than the older one.

For cleaner comparisons, it is usually better to:

• compare different risk levels or allocations using the same funds, or
• start the simulation from a date when all selected funds have data available.

In the fund selector, each ETF/ETC is shown with the date from which data are available in the simulator, so you can take this into account.

These simulations are for educational purposes only and do not replace personalised investment advice.

Portfolio risk is the possibility that a portfolio's value may decline, sometimes sharply. A key indicator is the maximum drawdown, which represents the largest loss recorded over a given period. It shows how much a portfolio could temporarily fall during market stress. To add perspective, PharosFolio® also displays rolling annual returns over 3, 5, and 10 years, illustrating how portfolios perform across different time horizons. Considering drawdown and rolling returns together helps you assess whether a portfolio matches your goals:

• A portfolio with deeper drawdowns may still be suitable for long-term investors (10+ years), since historical data show it can recover and deliver stronger long-term returns.
• Conversely, if your horizon is shorter (around 3 years), a portfolio with smaller drawdowns and steadier rolling returns may be more appropriate.

PharosFolio® lets you compare up to three portfolios simultaneously, helping you balance your tolerance for temporary losses with your time horizon and investment goals.

PharosFolio® uses monthly ETF/ETC data from their launch date. To extend the history back to 2002, we rely on publicly available reference data and indexes:

• Equity ETFs:
  • Global (developed+emerging): MSCI ACWI for funds tracking that index, and MSCI ACWI IMI for all others (differences with similar global indexes are minimal).
  • Global (developed): MSCI World for all funds (differences with similar global indexes are minimal).
  • US: S&P 500 and NASDAQ 100 for funds tracking those indexes.
• Bond ETFs → as a proxy, we use data from the Xtrackers II Eurozone Government Bond ETF (the oldest in its category, launched in May 2007), and extend the series with a synthetic index built from European Central Bank data, using maturity weights aligned with common market benchmarks.
• Gold ETC → gold spot price.

For equities and bonds, we use the total-return versions of the reference indexes (dividends/coupons reinvested) to mirror accumulating ETFs. This way, the most recent part of the simulations reflects actual ETF/ETC performance, while the extended history provides a consistent qualitative reconstruction. Together, they allow portfolios to be assessed over long horizons.

Official bond indexes require very expensive licenses, which would be unsustainable at this stage for a start-up like PharosFolio®. To keep simulations consistent over long periods, we use a synthetic total-return bond index—built from publicly available ECB data with benchmark-style maturity weights and coupon reinvestment—so it aligns with accumulating ETFs. This synthetic proxy applies only to the older part of the historical series, while the most recent years are always based directly on Xtrackers II Eurozone Government Bond ETF data. This ensures simulations remain closely aligned with real portfolio behavior.

PharosFolio® simulations are based on monthly historical data, which are necessary to estimate risk levels and calculate the asset allocation over time. The Rebalancing calculator, instead, uses real-time (delayed) market data to show how many units of each ETF/ETC would need to be bought or sold according to the asset allocation previously determined by the simulation. The Rebalancing calculator, despite providing reliable results, is provided for educational purposes only. It is designed to help users practice and become familiar with rebalancing mechanics. Should users choose to apply the results to their own portfolios, they do so entirely at their own risk.

Walk-forward analysis is a technique that applies a strategy to one historical period and then tests it on the following one. Repeating this process step by step shows how the strategy would have performed in actual past markets. PharosFolio® integrates this technique into its dynamic rebalancing method to deliver simulations that are more robust and better aligned with real market behavior.

No. PharosFolio® is an educational and informational tool. It helps you understand how different portfolios might have behaved in the past and assess risk, but it does not give personalized investment recommendations.

PharosFolio®'s simulations can be especially useful when you want to explore different risk levels or check how a portfolio could behave over time. Many users prefer to run simulations once or twice a year, or when their personal situation changes, to compare scenarios in a structured way. These simulations are for educational purposes only and do not replace personalised investment advice.

When you move from simulations to real trades, it is important to think about liquidity and market depth for the ETF you are trading.

• Liquidity and order book
  Liquidity is how easy it is to buy or sell an ETF without moving its price too much. The "order book" is the list of buy and sell orders at different prices. In ETFs with low trading volume or a thin order book, large orders can be harder to execute at the expected price.
• Larger orders
  With larger orders, there is a higher risk that the trade is only partially executed or not executed at all at your chosen price. For this reason, some investors prefer to split a large order into smaller trades, placed over time, to reduce the impact on the market and improve the chance of full execution.

These are only general, educational considerations. They are not a recommendation to buy or sell any ETF, or to use any specific way of placing orders. For decisions on how to place your orders in practice, you should refer to the tools and information provided by your bank or broker and, if needed, consult a qualified financial professional.

PharosFolio® is designed for individual investors in the Eurozone who want a simple, low-cost, and diversified way to explore portfolio strategies without active trading or complex products.