A cautious portfolio with high tech exposure and strong dividend yields

Report created on Dec 31, 2024

Risk profile Info

3/7
Cautious
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio is composed of 99.67% stocks, predominantly through ETFs, with a small fraction in cash and bonds. This structure aligns with a typical equity-heavy portfolio, which is common for those seeking growth. However, the lack of diversity in asset classes could pose risks during market downturns. To enhance resilience, consider introducing more bonds or alternative assets. This would provide a buffer against equity volatility, particularly for investors with a lower risk tolerance.

Growth Info

Historically, the portfolio has performed well, boasting a CAGR of 19.65%, which is impressive. This growth outpaces many benchmarks, indicating strong past performance. However, it's crucial to remember that past success doesn't guarantee future results. The maximum drawdown of -11.56% shows some vulnerability during market dips. To mitigate potential future losses, consider periodic rebalancing to maintain alignment with risk tolerance and market conditions.

Projection Info

The forward projection using Monte Carlo simulations shows a median return of 1,207.05% over the investment horizon. Monte Carlo analysis uses historical data to simulate a range of possible outcomes, offering insights into potential future performance. While the projections are optimistic, it's essential to recognize that they are based on past data and assumptions. Regularly review these projections and adjust your strategy as market conditions change to ensure alignment with your investment goals.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted in stocks, with minimal exposure to other asset classes like bonds or cash. This can lead to higher returns during bull markets but also increased risk during downturns. A more balanced allocation across different asset classes can enhance diversification, reducing overall risk. Consider incorporating bonds or other fixed-income instruments to provide stability and income, especially if your risk tolerance is on the lower side.

Sectors Info

  • Technology
    39%
  • Financials
    20%
  • Consumer Staples
    9%
  • Health Care
    6%
  • Consumer Discretionary
    6%
  • Industrials
    6%
  • Telecommunications
    4%
  • Energy
    4%
  • Utilities
    3%
  • Basic Materials
    2%
  • Real Estate
    1%

The portfolio is notably concentrated in the technology sector, accounting for 39% of the total allocation. While this has likely driven past performance, it also increases vulnerability to sector-specific risks, such as regulatory changes or tech market volatility. Balancing this exposure with investments in other sectors, such as healthcare or consumer staples, can mitigate sector-specific risks and provide more stable returns over time.

Regions Info

  • North America
    61%
  • Europe Developed
    32%
  • Asia Developed
    2%
  • Japan
    2%
  • Australasia
    1%
  • Asia Emerging
    1%

Geographically, the portfolio is heavily skewed towards North America, with 61.33% exposure, followed by Europe Developed at 31.76%. This concentration could limit benefits from global diversification. Consider increasing allocations to underrepresented regions like Asia or emerging markets to capture growth opportunities and reduce regional risk. Diversifying geographically can help protect against localized economic downturns and currency fluctuations.

Redundant positions Info

  • iShares Core S&P 500 UCITS ETF USD (Acc)
    SPDR® MSCI World UCITS ETF
    High correlation

The assets within the portfolio, particularly the iShares Core S&P 500 UCITS ETF and SPDR® MSCI World UCITS ETF, show high correlation. High correlation among assets can reduce diversification benefits, meaning that they might move similarly during market shifts. To improve diversification, consider replacing one of these with a less correlated asset. This adjustment could enhance the portfolio's resilience against market volatility and improve overall risk management.

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 could benefit from optimization using the Efficient Frontier, which aims to maximize returns for a given level of risk. This involves adjusting allocations among existing assets to achieve the best possible risk-return ratio. Before optimizing, address the high correlation between certain assets to ensure the portfolio is truly diversified. This process can help achieve a more efficient allocation, potentially improving overall returns without increasing risk.

Dividends Info

  • iShares Euro Dividend UCITS ETF 5.90%
  • VanEck Morningstar Developed Markets Dividend Leaders UCITS ETF 2.60%
  • Weighted yield (per year) 1.05%

The portfolio boasts a total dividend yield of 1.05%, with notable contributions from the iShares Euro Dividend UCITS ETF at 5.9%. Dividends provide a steady income stream, which can be beneficial for investors seeking regular cash flow. Maintaining a balance between growth and dividend-paying assets can optimize returns while providing income. Consider reinvesting dividends to benefit from compounding or adjusting allocations to increase dividend exposure if income is a priority.

Ongoing product costs Info

  • iShares Euro Dividend UCITS ETF 0.40%
  • SPDR® MSCI World UCITS ETF 0.12%
  • iShares Core S&P 500 UCITS ETF USD (Acc) 0.12%
  • VanEck Morningstar Developed Markets Dividend Leaders UCITS ETF 0.38%
  • Vanguard FTSE All-World High Dividend Yield UCITS ETF USD Accumulation 0.29%
  • VanEck Semiconductor UCITS ETF 0.35%
  • Weighted costs total (per year) 0.20%

The total expense ratio (TER) for the portfolio is 0.2%, which is relatively low and beneficial for long-term performance. Lower costs mean more of your returns are retained, enhancing compounding over time. It's crucial to periodically review and compare these costs with other investment options to ensure they remain competitive. Consider replacing high-cost assets with more cost-effective alternatives if similar exposure and performance can be achieved.

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