Balanced Portfolio with Broad Diversification in Global ETFs and Moderate Risk Exposure

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

What type of investor this portfolio is suitable for

Balanced Investors

This portfolio is suitable for investors who seek moderate growth with a balanced risk approach. They typically have a medium to long-term investment horizon and can tolerate some level of volatility. These investors are comfortable with broad market exposure and prefer a diversified portfolio that captures global growth opportunities. They are willing to accept moderate risk for the potential of higher returns compared to more conservative investments. Overall, this type of investor values a strategic mix of growth and stability in their investment portfolio.

Positions

  • iShares MSCI World Value Factor UCITS
    IWVL - IE00BP3QZB59
    50.00%
  • Vanguard FTSE All-World UCITS ETF USD Accumulation
    VWRP - IE00BK5BQT80
    50.00%

The portfolio is composed of two ETFs, each making up 50% of the total allocation. The iShares MSCI World Value Factor UCITS and Vanguard FTSE All-World UCITS ETF offer a balanced exposure to global equities. This setup provides broad diversification across various regions and sectors. The use of ETFs is a cost-effective way to gain exposure to a wide range of stocks, which can help mitigate risks associated with individual stock picking. Maintaining this broad diversification helps in spreading risk and potentially capturing returns from different market segments.

Growth Info

Historically, the portfolio has shown a commendable compound annual growth rate (CAGR) of 10.13%, which is quite robust. However, it has also experienced a maximum drawdown of -30.7%, indicating some volatility. The majority of the returns were concentrated in just 14 days, highlighting the importance of staying invested to capture those key performance days. Understanding the historical performance helps set realistic expectations and prepares for potential market fluctuations. Maintaining a long-term perspective and avoiding panic selling during downturns can help in achieving desired investment outcomes.

Projection Info

Using a Monte Carlo simulation with 1,000 iterations, the portfolio's future performance was projected. This statistical method uses random sampling to model potential outcomes of an investment. The results show a median expected return of 242.36% over the investment horizon, with a high probability of achieving positive returns. This indicates a promising outlook, but it's essential to remember that these are probabilistic estimates and not guarantees. Regularly reviewing and adjusting the portfolio as needed can help in staying aligned with investment goals and risk tolerance.

Asset classes

  • Stocks
    99%
  • Cash
    1%
  • Other
    0%
  • No data
    0%
  • Bonds
    0%

The portfolio is heavily weighted towards stocks, with 99.28% allocated to equities, and minimal exposure to cash and bonds. This high equity allocation is typical for a growth-oriented strategy but can lead to increased volatility. Diversifying into other asset classes like bonds or real estate can help reduce risk and provide more stability. While equity investments offer potential for higher returns, balancing them with fixed-income securities can cushion the impact of market downturns and provide steady income.

Sectors

  • Technology
    25%
  • Financials
    16%
  • Health Care
    12%
  • Industrials
    11%
  • Consumer Discretionary
    10%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    4%
  • Utilities
    3%
  • Real Estate
    2%

Sector allocation is well-distributed, with technology, financial services, and healthcare being the top sectors. This spread across 11 sectors provides a balanced exposure to different economic segments, reducing the risk of sector-specific downturns. The current allocation is beneficial in capturing growth from various industries. However, it's important to periodically review sector performance and make adjustments if necessary. Staying diversified across sectors can help in capitalizing on emerging trends while mitigating risks associated with sector-specific volatility.

Regions

  • North America
    54%
  • Europe Developed
    24%
  • Japan
    14%
  • Asia Emerging
    3%
  • Asia Developed
    3%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    0%
  • Europe Emerging
    0%

Geographically, the portfolio is predominantly invested in North America, followed by Europe and Japan. This allocation provides exposure to developed markets, which are generally more stable but may offer lower growth potential compared to emerging markets. Including a small percentage in Asia Emerging and other regions adds a growth component. Geographic diversification helps in spreading risk across different economies and can enhance returns. Regularly assessing the geographic allocation can ensure it aligns with global economic trends and investment goals.

Ongoing product costs

  • iShares MSCI World Value Factor UCITS 0.30%
  • Vanguard FTSE All-World UCITS ETF USD Accumulation 0.22%
  • Weighted costs total (per year) 0.26%

The total expense ratio (TER) of the portfolio is 0.26%, which is relatively low and cost-effective. Low costs are crucial in maximizing net returns over the long term. The chosen ETFs have competitive expense ratios, which help in keeping investment costs down. Monitoring and minimizing costs is an essential aspect of portfolio management. Even small differences in fees can significantly impact long-term performance. Ensuring that investment choices remain cost-efficient can enhance overall returns and contribute to achieving financial goals.

Risk vs. return

This chart shows the Efficient Frontier, calculated using your current assets with different allocation combinations. It highlights the best balance between risk and return based on historical data. "Efficient" portfolios maximize returns for a given risk or minimize risk for a given return. Portfolios below the curve are less efficient. This is informational and not a recommendation to buy or sell any assets.

The current portfolio is broadly diversified but not on the efficient frontier, where risk and return are optimally balanced. The efficient frontier represents the set of portfolios that offer the highest expected return for a given level of risk. While the existing allocation provides a solid foundation, exploring adjustments could enhance performance. By considering changes in asset allocation, the portfolio could potentially achieve a higher expected return without increasing risk. Regularly evaluating the portfolio's efficiency can lead to better alignment with financial goals.

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