Benchmarks
Overview
Many calculated values in FT Cloud use a benchmark/basis for the calculation. These are sometimes called the "risk free rate of return."
FastTrack suggests using the ETFs below as your basis for calculations.
Risk Free Rate
Often, investors will use a short term treasury rate (IRX-X - CBOE US T-Bill 13-Week Yld Bd Ix) for the risk free rate. FastTrack does not recommend this for FT Cloud.
FT Cloud helps you identify outperforming investments. Comparing securities to the ETFs below ensures you are doing analysis against something you may actually own.
For example, calculating a Sharpe Ratio against SPY indicates a security's risk-adjusted return profile vs. the S&P 500. i.e. will the security provide more return for each unit of risk than SPY? If not, then just own SPY. A Sharpe Ratio against a treasury rate is not very meaningful.
Suggested ETFs
| Category | Ticker | Name |
|---|---|---|
| Large Cap Equities | SPY | SPDR S&P 500 ETF Trust |
| Small Cap Equities | IWM | iShares Russell 2000 ETF |
| Mid Cap Equities | IJH | iShares Core S&P Mid-Cap ETF |
| Global Equities | URTH | iShares MSCI World ETF |
| Global Equities x USA | ACWX | iShares MSCI ACWI ex US ETF |
| Bonds | AGG | iShares Core US Aggregate Bond ETF |
| Junk Bonds | HYG | iShares iBoxx $ High Yield Corporate Bond ETF |
| Short Bonds | SHV | iShares Short Treasury Bond ETF |
| Muni Bonds | MUB | iShares National Muni Bond ETF |
| Commodities | PDBC | Invesco Optimum Yield Diversified Commodity Strategy ETF |
| Alternative Strategies | QAI | IQ Hedge Multi-Strategy Tracker ETF |