A conservative portfolio with moderate diversification and low-cost ETF focus

Report created on Dec 18, 2024

Risk profile Info

2/7
Conservative
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio is primarily composed of ETFs, with a significant allocation of 56.97% to the HSBC MSCI World UCITS ETF. This is complemented by a 38.69% allocation to the Xtrackers II EUR Overnight Rate Swap UCITS ETF and a smaller allocation to Xetra-Gold and Invesco Physical Bitcoin ETN EUR. The dominance of ETFs suggests a focus on broad market exposure and cost efficiency. This composition can provide a stable foundation for growth, but the limited exposure to alternative assets might restrict potential gains. Consider exploring additional asset classes to enhance diversification and potentially improve returns.

Growth Info

Historically, the portfolio has achieved a compound annual growth rate (CAGR) of 8.02%, with a maximum drawdown of -9.66%. This indicates a relatively stable performance with controlled downside risk, fitting for a conservative investor profile. However, past performance does not guarantee future results, as market conditions can change. It's crucial to continue monitoring performance and be prepared to make adjustments if the portfolio no longer aligns with financial goals or risk tolerance.

Projection Info

Utilizing Monte Carlo simulations, which run numerous hypothetical scenarios based on historical data, the portfolio shows potential for varied outcomes. The 5th percentile projects a 4.08% return, while the 50th and 67th percentiles show significantly higher returns of 514.56% and 876.08%, respectively. While these projections offer insight into potential future performance, they are not predictive. It's important to regularly review the portfolio and adjust based on evolving market conditions and personal investment goals.

Asset classes Info

  • Stocks
    57%
  • Bonds
    38%
  • Other
    2%

The portfolio is dominated by stocks (57.16%) and bonds (37.70%), with a small allocation to other assets. This allocation suggests a balance between growth and stability, aligning with a conservative risk profile. However, the limited exposure to alternative investments like commodities or real estate could mean missed opportunities for diversification. Consider gradually increasing exposure to other asset classes to enhance risk-adjusted returns and reduce reliance on traditional stocks and bonds.

Sectors Info

  • Technology
    16%
  • Financials
    9%
  • Consumer Discretionary
    6%
  • Health Care
    6%
  • Industrials
    6%
  • Telecommunications
    5%
  • Consumer Staples
    3%
  • Energy
    2%
  • Basic Materials
    2%
  • Utilities
    1%
  • Real Estate
    1%

Sector allocation is fairly balanced, with technology leading at 15.61%, followed by financial services and consumer cyclicals. The presence of multiple sectors helps mitigate sector-specific risks, but the concentration in technology could pose a risk if the sector underperforms. To further diversify, consider reallocating some funds to underrepresented sectors like utilities or real estate. This can provide additional stability and reduce dependency on a single sector's performance.

Regions Info

  • North America
    44%
  • Europe Developed
    9%
  • Japan
    3%
  • Australasia
    1%

Geographically, the portfolio is heavily weighted towards North America (43.84%), with modest exposure to Europe and Japan. This concentration in developed markets may offer stability but limits exposure to potentially higher-growth regions like Asia and Latin America. Diversifying geographic exposure can reduce regional risks and capture growth opportunities in emerging markets. Consider gradually increasing allocations to these regions to enhance global diversification and potential 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.

Click on the colored dots to explore allocations.

The portfolio's current asset allocation can potentially be optimized using the Efficient Frontier, which seeks the best risk-return balance. By adjusting the weights of existing assets, the portfolio could achieve a more favorable risk-return ratio. This process involves analyzing historical data to identify the optimal allocation that maximizes returns for a given level of risk. Regularly revisiting this analysis can help maintain efficiency and align the portfolio with changing market conditions and personal investment objectives.

Dividends Info

  • HSBC MSCI World UCITS ETF 0.70%
  • Weighted yield (per year) 0.40%

The portfolio's dividend yield is relatively low at 0.4%, with the HSBC MSCI World UCITS ETF contributing a yield of 0.7%. While dividends are not the primary focus of this portfolio, they can provide a steady income stream, especially in volatile markets. If income generation is a priority, consider reallocating a portion of the portfolio to higher-yielding assets. This can enhance cash flow without significantly altering the overall risk profile.

Ongoing product costs Info

  • HSBC MSCI World UCITS ETF 0.15%
  • Xtrackers II EUR Overnight Rate Swap UCITS ETF 1C 0.10%
  • Weighted costs total (per year) 0.12%

With a total expense ratio (TER) of 0.12%, the portfolio is cost-efficient, primarily due to its ETF focus. Low costs are crucial for maximizing net returns over time, as they minimize the drag on performance. However, it's important to regularly review and compare costs with similar products to ensure continued cost-effectiveness. Consider exploring other low-cost options or negotiating fees if possible to further enhance long-term returns.

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