IncomeShares Challenge: September Returns Snapshot

IncomeShares is running a live investing challenge with four well-known Italian investors. All four of them make YouTube videos about markets and income investing. Each participant opened a real brokerage account at Directa on 15 June with €3,000. They can only buy or sell IncomeShares exchange-traded products (ETPs), but they pick their own holdings from the range. The challenge runs for 12 months, and this is its third monthly snapshot.

This article explains how each investor's portfolio performed up to 20 September – and what changed since August.

How the IncomeShares Challenge works

We've partnered with Directa to give investors commission-free purchases on IncomeShares ETPs, subject to certain conditions. Directa is an independent Italian broker, and its platform gives the four participants direct access to IncomeShares ETPs across European exchanges. On Euronext Amsterdam, it charges them no commission at all on IncomeShares purchases of €1,000 or more. Every sale still carries a fee, wherever it happens.

• Gianluca Ranieri Bandini held three of our ETPs on 20 September. Between them they cover European equities, US Treasuries, and gold.

• Andrea Ferrante publishes as Andrea getquin. He still held a single ETP, the same one he started with.

• Federico La Torella is better known as Il Re dei Dividendi. He sold out of technology in September and now holds two of our ETPs.

• Lorenzo Boiardi runs Investire in Borsa a caccia di dividendi. He held three of our ETPs, split close to evenly.

The figures below come from their monthly Directa statements. That means every number here is a real account balance rather than a simulation. This snapshot covers 15 June to 20 September.

All four investors received their third round of monthly distributions on 11 September. A distribution is the cash payment an ETP makes to the investors who hold it. IncomeShares ETPs aim to pay one every month.

Note: we've shown everything before withholding tax, so the four investors compare like for like. What each investor pays in tax depends on their own circumstances.

Where the four investors stand after three months

The chart below shows each investor's total return on his €3,000, measured from 15 June to 20 September.

Lorenzo moved into the lead at plus 0.41%, and Andrea was next at plus 0.17%. That makes September the first month with two investors above their starting €3,000. Gianluca slipped to minus 1.88% after leading for two months. Federico fell further to minus 11.79%, his lowest point of the challenge so far.

Income kept building while holdings stayed below cost

The next chart sets the income each investor has earned against the change in value of his holdings.

Federico has collected €349.85 in income since the challenge began – an 11.66% yield on his starting €3,000. His holdings were 6.25% below what they cost him, but that figure only counts what he still owns. His September sales locked in a further €480.11 of losses. Andrea's holdings have fallen the most at 6.99%, against income of 7.60%. Gianluca and Lorenzo each collected just over 5%, and their holdings fell by a bit under 5%.

Our ETPs sell options and collect an upfront fee, called a premium. We aim to pay those premiums out as monthly income. Premiums have tended to be larger where implied volatility is higher. Higher-volatility assets can also lose more value when markets fall. Neither the income nor the price tells the whole story on its own.

What each investor holds

The next chart shows how each portfolio was split on 20 September.

• Gianluca had 69% of his money in our EuroStoxx 50 Options ETP. 20+ Year Treasury took 20%, and Gold+ Yield the last 11%.

• Andrea still had everything in our S&P 500 Options ETP.

• Federico now holds two ETPs: 75/10/15 Multi-Asset at 52% and Gold+ Yield at 48%.

• Lorenzo stayed close to an even split, with Gold+ Yield at 35%, 20+ Year Treasury at 34%, and Magnificent 7 at 31%.

What the four investors bought and sold

Federico made the month's big move. The other three added small amounts to what they already held.

• Federico sold all 86 shares of our Semiconductors Leaders ETP on 1 September. He sold all 52 shares of our Taiwan Semiconductor ETP the same day. Both went for less than they cost him, and each sale carried a €5.00 commission. Two days later he put €1,172.80 into our Gold+ Yield ETP. He bought it on Xetra, so that purchase carried a €9.50 commission. He had already qualified for September's distributions on both semiconductor ETPs, so they still paid him €58.12 on 11 September.

• Gianluca added one share of our 20+ Year Treasury ETP on 2 September. His August switch into European equities hasn't paid off yet. Our EuroStoxx 50 Options ETP fell 3.9% in price over the month, though it paid him €22.55.

• Andrea bought 10 more shares of our S&P 500 Options ETP on 1 September, using part of his August distribution.

• Lorenzo added one share each of our Magnificent 7 and 20+ Year Treasury ETPs on 15 September.

Three months down, nine to go. The October snapshot will show whether Federico's move into gold steadies his portfolio – and whether Lorenzo holds the lead.

Key highlights

• Lorenzo took the lead at plus 0.41%. September was the first month with two investors above their starting €3,000.

• Federico sold both semiconductor ETPs at a loss and moved €1,172.80 into gold. He has collected the most income at €349.85, but he is furthest behind at minus 11.79%.

• Gianluca lost the lead he had held since July. He slipped to minus 1.88% after his European equities ETP fell 3.9% in price.