A globally diversified single-ETF portfolio with a strong focus on technology and North American markets

Report created on Dec 28, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

This portfolio consists solely of the Vanguard FTSE All-World UCITS ETF, representing a single asset class—stocks. While this ETF offers broad market exposure, the lack of diversification across different asset classes may expose the portfolio to greater volatility. Typically, balanced portfolios include a mix of stocks, bonds, and other assets to spread risk. By solely focusing on equities, the portfolio may benefit from stock market growth but also face higher risk during downturns. Consider adding fixed income or alternative assets to enhance diversification and potentially stabilize returns.

Growth Info

Historically, this portfolio has delivered a robust Compound Annual Growth Rate (CAGR) of 12.85%, which is impressive. However, it also experienced a significant maximum drawdown of -33.45%, indicating potential vulnerability during market downturns. While past performance can provide insights, it's important to remember that it doesn't guarantee future results. Comparing this performance to a balanced benchmark, the portfolio has outperformed in terms of growth but with higher volatility. To mitigate future risks, consider strategies that could reduce drawdowns, such as incorporating defensive assets.

Projection Info

Utilizing Monte Carlo simulations, the portfolio's future outcomes show a wide range of possibilities. Monte Carlo analysis uses historical data to simulate potential future returns, providing a spectrum of outcomes. The 50th percentile projects a 412.74% return, while the 5th percentile projects a 95.88% return. This highlights the uncertainty and variability in potential outcomes. While the simulations suggest a positive average return, it's crucial to remember that these are estimates based on historical data and not guarantees. Diversifying further might help narrow the range of potential outcomes.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted in stocks, with over 99% allocation. This concentration in a single asset class can lead to high volatility, especially during market downturns. In comparison, balanced portfolios typically include a mix of asset classes like bonds and cash to provide stability and income. While the stock-focused allocation may drive growth during bull markets, it could also result in significant losses during bear markets. To improve resilience, consider adding other asset classes that may perform differently under various market conditions.

Sectors Info

  • Technology
    26%
  • Financials
    16%
  • Health Care
    11%
  • Consumer Discretionary
    10%
  • Industrials
    10%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    4%
  • Utilities
    3%
  • Real Estate
    2%

This portfolio has a notable concentration in the technology sector, accounting for over 25% of the allocation, followed by financial services and healthcare. While technology has been a strong performer, such concentration can lead to increased volatility, especially if the sector faces challenges. In contrast, a more evenly distributed sector allocation can mitigate sector-specific risks. To enhance stability, consider balancing the portfolio by increasing exposure to underrepresented sectors, which could provide a buffer during sector-specific downturns.

Regions Info

  • North America
    66%
  • Europe Developed
    14%
  • Asia Emerging
    6%
  • Japan
    6%
  • Asia Developed
    4%
  • Australasia
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is heavily tilted towards North America, with 65.54% exposure, followed by Europe and Asia. This concentration may limit diversification benefits and expose the portfolio to regional economic risks. While North American markets have shown strong historical performance, they can also be volatile. A more balanced geographic allocation could reduce risk by spreading exposure across different economic regions. Consider increasing allocations to underrepresented regions to enhance diversification and capture growth opportunities globally.

Ongoing product costs Info

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

The portfolio's total expense ratio (TER) of 0.22% is relatively low, which is beneficial for long-term performance. Lower costs mean more of your investment returns stay in your pocket, compounding over time. This aligns well with best practices for cost-efficiency in investing. However, always be mindful of any additional fees, such as trading costs or taxes, that could impact overall returns. To maintain cost-effectiveness, periodically review the portfolio to ensure that all components continue to offer value for their cost.

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