A balanced portfolio with a tech focus and global equity exposure for moderate risk investors

Report created on Jan 21, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio is evenly split between two ETFs, each making up 50% of the total. One ETF tracks the NASDAQ-100, while the other follows the FTSE All-World index. This composition reflects a balanced approach, combining a focus on large-cap technology stocks with a broader global equity exposure. The even split provides a blend of growth potential and diversification, aligning with a balanced risk profile. To enhance diversification, consider incorporating additional asset classes like bonds or real estate, which could help mitigate volatility during market downturns.

Growth Info

Historically, the portfolio has shown strong performance with a compound annual growth rate (CAGR) of 15.76%. This indicates robust growth over time, outperforming many traditional benchmarks. However, the maximum drawdown of -27.32% highlights the potential for significant short-term losses. Understanding these metrics is crucial for setting realistic expectations. While past performance is not a guarantee of future results, the historical trends suggest the portfolio has been effective in capitalizing on market upswings. It's wise to continue monitoring performance relative to benchmarks and adjust as needed.

Projection Info

Using Monte Carlo simulations, which rely on historical data to project future outcomes, the portfolio's potential future performance was analyzed. The simulations suggest a wide range of possible outcomes, with a 5th percentile return of 99.9% and a 67th percentile return of 964.3%. While these projections offer insight into potential future performance, they are not guarantees. The portfolio's annualized return across simulations is 17.02%, indicating strong potential growth. It's important to understand that these projections are based on historical trends and may not account for future market changes.

Asset classes Info

  • Stocks
    100%

The portfolio is entirely composed of stocks, with no exposure to other asset classes like bonds or real estate. This concentration in equities can lead to higher volatility, but also offers significant growth potential. In comparison to typical balanced portfolios, which often include bonds for stability, this portfolio is more aggressive. While the current allocation aligns with a growth-focused strategy, adding other asset classes could enhance diversification and reduce risk. Consider incorporating fixed-income securities to balance the portfolio and provide a buffer during market downturns.

Sectors Info

  • Technology
    39%
  • Consumer Discretionary
    12%
  • Telecommunications
    12%
  • Financials
    9%
  • Health Care
    8%
  • Industrials
    7%
  • Consumer Staples
    6%
  • Basic Materials
    2%
  • Energy
    2%
  • Utilities
    2%
  • Real Estate
    1%

The portfolio is heavily concentrated in the technology sector, accounting for 39% of the total allocation. Other significant sectors include consumer cyclicals and communication services. This sectoral allocation aligns with current market trends, where technology has been a major growth driver. However, such concentration can increase volatility, especially during periods of tech market corrections. To mitigate sector-specific risks, consider diversifying into underrepresented sectors like utilities or healthcare. This could provide more stability and protect against downturns in any single sector.

Regions Info

  • North America
    82%
  • Europe Developed
    8%
  • Asia Emerging
    3%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Latin America
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is predominantly focused on North America, which makes up 82% of the allocation. This heavy weighting towards a single region increases exposure to regional economic and political risks. While the focus on North America has historically been beneficial, diversifying into other regions could enhance global exposure. Consider increasing allocations to emerging markets or underrepresented regions like Europe or Asia, which may offer growth opportunities and further diversification benefits.

Market capitalization Info

  • Mega-cap
    51%
  • Large-cap
    35%
  • Mid-cap
    14%

The portfolio is primarily invested in mega-cap stocks, which account for 51% of the allocation, followed by big-cap stocks at 35%. This focus on large-cap companies suggests a preference for stability and established market leaders. While large-cap stocks often provide more stability, they may offer lower growth potential compared to smaller companies. To enhance growth opportunities, consider incorporating medium or small-cap stocks. This could increase diversification and potentially boost returns, albeit with increased volatility.

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.

Click on the colored dots to explore allocations.

The portfolio's current allocation can be optimized using the Efficient Frontier, a concept that helps find the best possible risk-return ratio. This involves adjusting the weights of existing assets to achieve the most efficient balance. By optimizing along the Efficient Frontier, you can potentially increase returns without taking on additional risk or reduce risk without sacrificing returns. This process is based solely on the current assets and does not involve introducing new ones. Regularly revisiting the portfolio's efficiency can ensure it remains aligned with your investment goals.

Ongoing product costs Info

  • Invesco EQQQ NASDAQ-100 UCITS ETF (GBP Hdg) 0.35%
  • Vanguard FTSE All-World UCITS ETF USD Accumulation 0.22%
  • Weighted costs total (per year) 0.28%

The total expense ratio (TER) of the portfolio is 0.28%, which is relatively low and supports better long-term performance by minimizing costs. Low costs are a crucial factor in maximizing net returns over time. When compared to industry averages, this TER is competitive, indicating efficient cost management. To maintain this advantage, regularly review the expense ratios of the portfolio components and consider lower-cost alternatives if available. Keeping costs low is a key element in achieving long-term investment success.

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