Balanced and Broadly Diversified Portfolio with Strong Historic Performance and Low 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 a blend of growth and stability. Such an investor typically has a moderate risk tolerance and a long-term investment horizon. They aim to achieve steady capital appreciation while being prepared for occasional market volatility. Their goals often include funding future expenses like retirement or education. This investor values diversification and cost-efficiency, understanding the importance of maintaining a well-rounded and low-cost portfolio to achieve their financial objectives.

Positions

  • Vanguard FTSE Developed World UCITS ETF USD Accumulation
    VHVE - IE00BK5BQV03
    45.00%
  • Vanguard S&P 500 UCITS Acc
    VUAG - IE00BFMXXD54
    45.00%
  • Vanguard FTSE Emerging Markets UCITS ETF USD Accumulation GBP
    VFEG - IE00BK5BQV03
    10.00%

The portfolio is primarily composed of three Vanguard ETFs, with a significant allocation to developed markets and a smaller portion to emerging markets. This broad diversification helps reduce risk while providing exposure to various global markets. The allocation is heavily tilted towards equities, which suggests a growth-oriented strategy. Maintaining such a composition can be beneficial for capital appreciation over the long term, but it's essential to regularly review the allocation to ensure it aligns with evolving financial goals.

Growth

Historically, this portfolio has shown a commendable performance with a compound annual growth rate (CAGR) of 12.54%. The maximum drawdown of -28.87% indicates that while the portfolio can experience significant dips, it also has a strong recovery potential. The fact that 16 days make up 90% of the returns highlights the importance of staying invested to capture these crucial gains. This performance suggests a robust strategy that has weathered market fluctuations effectively.

Projection

Using a Monte Carlo simulation with 1,000 iterations, the portfolio's future performance was projected. This simulation provides a range of possible outcomes based on historical data and variability. The median (50th percentile) projection shows a potential growth of 304.63%, while the 5th percentile indicates a more conservative growth of 16.14%. The high number of simulations with positive returns (968 out of 1,000) and an annualized return of 12.4% suggest that the portfolio is well-positioned for future growth, though it's important to remain aware of potential risks.

Asset classes

  • Stocks
    100%
  • Other
    0%

The portfolio is heavily weighted towards equities, with 99.97% allocated to stocks and a negligible portion to other asset classes. This high concentration in stocks can lead to significant growth potential but also exposes the portfolio to higher volatility. Diversifying into other asset classes, such as bonds or commodities, could help mitigate risk and provide more stability during market downturns. Regularly reassessing the asset allocation is crucial to maintaining a balanced risk profile.

Sectors

  • Technology
    27%
  • Financials
    15%
  • Health Care
    11%
  • Consumer Discretionary
    10%
  • Industrials
    9%
  • Telecommunications
    9%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    3%
  • Utilities
    3%
  • Real Estate
    2%

The sector allocation within the portfolio is diverse, with significant exposure to technology (26.79%), financial services (14.84%), and healthcare (11.19%). This diversification across multiple sectors helps reduce sector-specific risks and ensures that the portfolio is not overly reliant on any single industry. However, it's important to monitor sector performance and trends to make informed adjustments. Ensuring a balanced sector distribution can help capture growth opportunities across various parts of the economy.

Regions

  • North America
    77%
  • Europe Developed
    8%
  • Asia Emerging
    6%
  • Japan
    3%
  • Asia Developed
    3%
  • Africa/Middle East
    1%
  • Latin America
    1%
  • Australasia
    1%
  • Europe Emerging
    0%

Geographically, the portfolio is heavily weighted towards North America (76.72%), with smaller allocations to Europe Developed (8.14%) and Asia Emerging (5.80%). This concentration in North America reflects the dominance of U.S. markets but also exposes the portfolio to regional risks. Diversifying further into other geographic regions could help mitigate these risks and take advantage of growth opportunities in underrepresented markets. Periodic reviews of geographic allocations can ensure a well-rounded global exposure.

Ongoing product costs

  • Vanguard FTSE Developed World UCITS ETF USD Accumulation 0.12%
  • Vanguard S&P 500 UCITS Acc 0.07%
  • Weighted costs total (per year) 0.09%

The portfolio benefits from very low costs, with an overall Total Expense Ratio (TER) of 0.09%. This cost efficiency is a significant advantage, as lower fees mean more of the returns stay in the portfolio. Vanguard ETFs are known for their low-cost structure, which can greatly enhance long-term performance. Continually monitoring and managing investment costs is crucial to maximizing net returns. Maintaining a cost-effective portfolio aligns well with prudent investment principles.

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