Broadly Diversified Balanced Portfolio with Strong Global Exposure and Moderate Costs

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 moderate risk and return. Such an investor typically has a medium to long-term investment horizon and aims for steady growth while being able to tolerate some volatility. The broad diversification across sectors and regions makes it ideal for those looking to mitigate specific risks while still aiming for capital appreciation. This investor is likely comfortable with market fluctuations and understands the potential for both gains and losses.

Positions

  • Vanguard FTSE All-World UCITS ETF
    VGWL - IE00B3RBWM25
    100.00%

The portfolio consists solely of the Vanguard FTSE All-World UCITS ETF, which offers exposure to a wide range of global equities. This ETF includes a broad spectrum of sectors and geographic regions, making it well-diversified. The risk classification is balanced, which means it aims to provide a moderate level of risk and return. With a Total Expense Ratio (TER) of just 0.22%, the costs are relatively low, which is beneficial for long-term growth. However, being 100% in one ETF could limit flexibility in managing risk.

Growth

Historically, the portfolio has performed well, boasting a Compound Annual Growth Rate (CAGR) of 11.43%. However, it has experienced a maximum drawdown of -33.43%, indicating significant volatility during market downturns. The portfolio's returns are concentrated, with 90% of returns occurring on just 25 days. This suggests that missing out on a few key days could significantly impact overall performance. While the historical performance is strong, it's essential to consider the volatility and the potential for significant losses during downturns.

Projection

Using a Monte-Carlo simulation with 1,000 iterations, the portfolio's future performance was projected. This simulation assumes a hypothetical initial investment and provides a range of potential outcomes. The 5th percentile result was 81.95%, indicating a worst-case scenario. The median (50th percentile) result was 400.38%, and the 67th percentile was 557.85%, showing strong potential for growth. With 994 out of 1,000 simulations yielding positive returns, the annualized return across all simulations was 13.17%. This suggests a high probability of positive returns, albeit with some risk.

Asset classes

  • Stocks
    100%
  • Other
    0%
  • No data
    0%

The portfolio is heavily weighted towards stocks, comprising 99.95% of the total allocation. This high exposure to equities means the portfolio is likely to experience significant volatility. While equities offer the potential for high returns, they also come with higher risk compared to other asset classes like bonds or cash. To reduce risk, consider incorporating other asset classes such as bonds, which can provide more stability and income during market downturns.

Sectors

  • Technology
    24%
  • Financials
    16%
  • Health Care
    11%
  • Consumer Discretionary
    11%
  • Industrials
    10%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Energy
    5%
  • Basic Materials
    4%
  • Utilities
    2%
  • Real Estate
    2%

The sector allocation within the ETF is diverse, with significant exposure to Technology (24.23%), Financial Services (15.99%), and Healthcare (11.22%). This broad sector diversification helps mitigate risks associated with any single industry. However, the high concentration in Technology could make the portfolio more susceptible to sector-specific downturns. To further balance the portfolio, consider monitoring sector performance and making adjustments as needed to ensure a more even distribution across sectors.

Regions

  • North America
    64%
  • Europe Developed
    16%
  • Japan
    6%
  • Asia Emerging
    5%
  • Asia Developed
    4%
  • Australasia
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%
  • Europe Emerging
    0%

Geographically, the portfolio has a strong focus on North America (64.33%), followed by Europe Developed (15.58%) and Japan (6.34%). This allocation provides exposure to some of the world's largest and most stable markets. However, the heavy weighting towards North America could expose the portfolio to regional risks. Diversifying further into emerging markets or other regions could provide additional growth opportunities and reduce regional risk.

Dividends

  • Vanguard FTSE All-World UCITS ETF 1.70%
  • Weighted yield (per year) 1.70%

The Vanguard FTSE All-World UCITS ETF offers a dividend yield, providing a source of income in addition to capital appreciation. While the exact yield can vary, dividends can help cushion the impact of market volatility and provide a steady income stream. Reinvesting dividends can also contribute to the portfolio's growth over time. It's important to monitor dividend payouts and consider their role in the overall investment strategy.

Ongoing product costs

  • Vanguard FTSE All-World UCITS ETF 0.22%
  • Weighted costs total (per year) 0.22%

The portfolio's costs are relatively low, with a Total Expense Ratio (TER) of 0.22%. Low costs are advantageous as they leave more room for compounding returns over time. High fees can erode investment gains, so maintaining a low-cost structure is beneficial for long-term growth. However, it's essential to periodically review fees to ensure they remain competitive and align with the portfolio's performance and objectives.

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