Balanced Portfolio with Broad Diversification and Strong Dividend Focus for Moderate Risk Tolerance
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 a balanced investor who seeks a mix of income and growth through dividends and capital appreciation. Such an investor typically has a moderate risk tolerance and a medium to long-term investment horizon. They value diversification across sectors and geographies to mitigate risks and capture global opportunities. The investor is comfortable with some market volatility, understanding that it is part of achieving potential returns. Their goals may include generating steady income while also growing their capital over time.
Positions
-
SPDR S&P Global Dividend Aristocrats UCITS
ZPRG - IE00B9CQXS71 80.00% -
SPDR S&P Emerging Markets Dividend Aristocrats UCITS ETF (Dist)
SPYV - IE00B6YX5B26 20.00%
This portfolio is composed of two ETFs: SPDR S&P Global Dividend Aristocrats UCITS, making up 80%, and SPDR S&P Emerging Markets Dividend Aristocrats UCITS ETF, contributing 20%. Such composition indicates a strong emphasis on dividend-paying stocks, with a balanced risk classification. The portfolio's broad diversification is evidenced by its exposure to a wide array of sectors and geographies. This setup offers a good mix of stability and growth potential. To enhance the portfolio's robustness, consider maintaining this diversification while potentially exploring other asset classes for additional balance.
Growth
Analyzing the historical performance, the portfolio has a compound annual growth rate (CAGR) of 5.57%, with a maximum drawdown of -41.08%. This indicates moderate growth with significant volatility during downturns. The portfolio's performance is concentrated, with 90% of returns occurring in just 15 days. This suggests that while the portfolio can deliver returns, it's susceptible to market swings. To mitigate this, maintaining a diversified approach and considering risk management strategies could be beneficial, ensuring the portfolio remains aligned with long-term financial goals.
Projection
Using a Monte Carlo simulation with 1,000 iterations, the portfolio's future performance was projected. This method considers various scenarios to estimate potential outcomes. Results show a 5th percentile return of -40.1% and a 50th percentile return of 81.08%, with 67th percentile reaching 137.76%. The simulations suggest an annualized return of 5.8%, with 815 simulations yielding positive returns. While these projections are not guarantees, they provide insight into potential risks and rewards. Regularly reviewing the portfolio's alignment with personal risk tolerance and adjusting as needed could enhance long-term success.
Asset classes
- Stocks 100%
- Cash 0%
The portfolio is heavily weighted towards stocks, comprising 99.87% of the allocation, with a minimal cash position of 0.13%. This concentration in equities aligns with the goal of capital appreciation and dividend income. However, it also exposes the portfolio to market volatility. To manage risk effectively, considering the inclusion of other asset classes like bonds could provide stability and reduce overall volatility. Balancing growth and risk through strategic asset allocation adjustments is vital for maintaining a resilient investment strategy.
Sectors
- Financials 25%
- Utilities 22%
- Real Estate 10%
- Telecommunications 7%
- Industrials 6%
- Health Care 6%
- Energy 5%
- Consumer Staples 5%
- Basic Materials 5%
- Consumer Discretionary 4%
- Technology 4%
Sector allocation within the portfolio is diverse, with significant exposure to financial services (25.41%) and utilities (22.39%). Other sectors like real estate, communication services, and industrials also contribute to diversification. This broad sector exposure helps mitigate sector-specific risks and enhances growth opportunities. However, the portfolio's sector weights could lead to overexposure in certain areas. Regularly reviewing sector allocations and ensuring they align with market trends and personal investment goals can optimize the portfolio's performance and risk management.
Regions
- North America 69%
- Europe Developed 19%
- Asia Developed 7%
- Japan 4%
- Asia Emerging 1%
Geographically, the portfolio is predominantly invested in North America (69.20%), followed by Europe Developed (18.79%) and smaller allocations in Asia Developed, Japan, and Asia Emerging. This geographic diversification reduces regional risk and captures global growth opportunities. However, the heavy North American focus could limit exposure to other potentially high-growth regions. To optimize geographic diversification, monitoring global market conditions and adjusting allocations to capitalize on emerging opportunities while managing risks can be beneficial.
Dividends
- SPDR S&P Emerging Markets Dividend Aristocrats UCITS ETF (Dist) 2.00%
- SPDR S&P Global Dividend Aristocrats UCITS 3.60%
- Weighted yield (per year) 3.28%
The portfolio boasts a robust total dividend yield of 3.28%, with individual yields of 3.6% from SPDR S&P Global Dividend Aristocrats UCITS and 2.0% from SPDR S&P Emerging Markets Dividend Aristocrats UCITS ETF. This focus on dividend aristocrats ensures a steady income stream, appealing to income-focused investors. While dividends provide stability, they should be balanced with growth opportunities. Regularly assessing the sustainability of dividend yields and exploring growth-oriented investments can ensure a well-rounded portfolio that meets both income and capital appreciation goals.
Ongoing product costs
- SPDR S&P Emerging Markets Dividend Aristocrats UCITS ETF (Dist) 0.04%
- SPDR S&P Global Dividend Aristocrats UCITS 0.45%
- Weighted costs total (per year) 0.37%
The portfolio incurs a total expense ratio (TER) of 0.37%, with individual costs of 0.04% for SPDR S&P Emerging Markets Dividend Aristocrats UCITS ETF and 0.45% for SPDR S&P Global Dividend Aristocrats UCITS. These costs are relatively low, allowing more of the portfolio's returns to be retained by the investor. Keeping investment costs low is crucial for maximizing net returns over the long term. Regularly reviewing and comparing expense ratios with similar investment options can help ensure cost-effectiveness and enhance overall portfolio performance.
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