Balanced Cautious Portfolio with High Diversification and Efficient Frontier Proximity for Moderate Risk-Tolerant Investors

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

Cautious Investors

This portfolio suits an investor who is cautious yet seeks moderate growth through a diversified approach. They likely have a medium to long-term investment horizon, balancing risk and reward while maintaining a conservative stance. This investor values diversification across sectors and geographies, aiming for steady capital appreciation with some exposure to growth opportunities. Their risk tolerance is moderate, and they prefer a well-rounded portfolio that can withstand market fluctuations, ensuring a stable path towards achieving their financial goals.

Positions

  • Vanguard FTSE All-World UCITS ETF USD Accumulation
    VWCE - IE00BK5BQT80
    50.00%
  • Invesco EQQQ NASDAQ-100 UCITS ETF Acc
    EQQB - IE00BFZXGZ54
    20.00%
  • HSBC MSCI Emerging Markets Value ESG UCITS ETF USD (Acc) EUR
    H41E - IE000NVVIF88
    20.00%
  • iShares Physical Gold ETC EUR
    PPFB - IE00B4ND3602
    10.00%

The portfolio is composed of four ETFs, with a significant allocation in the Vanguard FTSE All-World UCITS ETF, making up 50% of the portfolio. The Invesco EQQQ NASDAQ-100 UCITS ETF and HSBC MSCI Emerging Markets Value ESG UCITS ETF both contribute 20% each, while the iShares Physical Gold ETC rounds it out with 10%. This composition reflects a balanced approach, with a focus on global equity markets and a touch of commodity exposure through gold. It's a well-diversified portfolio, offering exposure to a broad range of asset classes and sectors.

Growth Info

Historically, the portfolio has demonstrated impressive performance with a compound annual growth rate (CAGR) of 20.57%. This indicates strong growth potential over time. However, it's important to note the maximum drawdown of -8.66%, which reflects the largest peak-to-trough decline. Understanding this helps in assessing the risk associated with the portfolio. The impressive returns suggest that the portfolio has capitalized on growth opportunities, yet investors should remain aware of potential volatility and market fluctuations.

Projection Info

Using a Monte-Carlo simulation, which models the probability of different outcomes in a process that cannot easily be predicted due to the intervention of random variables, the portfolio shows promising forward projections. Assuming a hypothetical initial investment, the simulations reveal a 50th percentile end value of 1,783.39%, indicating substantial potential growth. The 5th percentile at 648.31% suggests resilience even in less favorable scenarios. With all simulations yielding positive returns, the portfolio appears robust, though investors should remain mindful of the inherent uncertainties in market predictions.

Asset classes

  • Stocks
    90%
  • Other
    10%
  • No data
    0%

The portfolio is heavily weighted towards stocks, comprising nearly 90% of the total allocation, with the remaining 10% in other asset classes, primarily gold. This allocation underscores a growth-oriented strategy, leveraging equities for capital appreciation. The inclusion of gold adds a diversification element, providing a hedge against market volatility. While the stock-heavy composition aligns with growth objectives, investors should periodically review their asset allocation to ensure it remains aligned with their risk tolerance and financial goals.

Sectors

  • Technology
    29%
  • Financials
    12%
  • Consumer Discretionary
    10%
  • Telecommunications
    9%
  • Health Care
    8%
  • Industrials
    7%
  • Consumer Staples
    6%
  • Basic Materials
    3%
  • Energy
    2%
  • Utilities
    2%
  • Real Estate
    2%

Sector-wise, the portfolio is predominantly invested in technology, which accounts for approximately 29% of the allocation. Other significant sectors include financial services, consumer cyclicals, and communication services. This sector allocation suggests a focus on growth industries with potential for innovation and expansion. However, it's crucial to recognize the cyclical nature of these sectors, which may introduce volatility. A diversified sector allocation can help mitigate risks associated with economic downturns, ensuring a balanced exposure to various market segments.

Regions

  • North America
    52%
  • Asia Emerging
    13%
  • Asia Developed
    10%
  • Europe Developed
    8%
  • Japan
    3%
  • Latin America
    2%
  • Africa/Middle East
    2%
  • Australasia
    1%
  • Europe Emerging
    0%

Geographically, the portfolio has a strong bias towards North America, comprising over 51% of the allocation. This is followed by emerging and developed Asia, and Europe. Such a distribution reflects a strategic emphasis on regions with robust economic growth prospects. While North America offers stability and innovation, emerging markets present opportunities for higher returns. Investors should remain cognizant of geopolitical risks and currency fluctuations, which can impact international investments. A well-balanced geographic allocation can enhance diversification and reduce region-specific risks.

Ongoing product costs

  • Invesco EQQQ NASDAQ-100 UCITS ETF Acc 0.35%
  • Vanguard FTSE All-World UCITS ETF USD Accumulation 0.22%
  • Weighted costs total (per year) 0.18%

The portfolio's total expense ratio (TER) is relatively low, with the Vanguard FTSE All-World UCITS ETF having the lowest cost at 0.22%. The Invesco EQQQ NASDAQ-100 UCITS ETF is slightly higher at 0.35%. Keeping investment costs low is crucial for maximizing net returns over time. High costs can erode gains, so maintaining a cost-efficient portfolio is beneficial. Investors should continue to monitor expense ratios and consider cost-effective options when making investment decisions to ensure that fees do not diminish overall returns.

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 portfolio is close to the efficient frontier, indicating a well-optimized balance between risk and return. However, it's not the absolute optimal portfolio, which suggests room for improvement. Investors can explore adjusting their risk level to better align with their preferences. Moving along the efficient frontier allows for either a riskier or more conservative portfolio. By fine-tuning asset allocation, investors can potentially enhance returns without significantly increasing risk, optimizing their investment strategy to better suit their financial objectives.

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