Balanced Portfolio with Strong Global Diversification and Moderate Risk Suited for Growth-Oriented Investors

Report created on Dec 5, 2024

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 composed of four ETFs, with the Vanguard FTSE All-World UCITS ETF making up 60% of the allocation. This indicates a strong focus on global equity exposure, providing a broad market coverage. The remaining 40% is split among three other ETFs, including emerging markets and European-focused funds, offering additional diversification. Such a composition aims to capture growth opportunities globally. This diversified approach helps in spreading risk across different markets and sectors. To enhance diversification further, consider periodically reviewing the allocation to ensure it aligns with long-term investment goals.

Growth Info

Historically, the portfolio has demonstrated a solid performance with a compound annual growth rate (CAGR) of 11.25%. However, it also experienced a maximum drawdown of -33.1%, indicating periods of significant volatility. This suggests that while the portfolio has potential for growth, it is also subject to market fluctuations. Understanding past performance is crucial for setting realistic expectations and preparing for potential downturns. To manage volatility, consider maintaining a long-term investment horizon and ensuring the portfolio aligns with personal risk tolerance.

Projection Info

A Monte Carlo simulation, which uses random sampling to predict future outcomes, was conducted with 1,000 simulations. The results indicate a median expected return of 233.58%, with a 5th percentile return of 4.68% and a 67th percentile return of 344.06%. This suggests a wide range of possible outcomes, highlighting the inherent uncertainty in investing. The simulation shows a high probability of positive returns, but also underscores the importance of being prepared for variability. Regularly reviewing and adjusting the portfolio can help navigate potential market changes.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted towards stocks, comprising approximately 99.67% of the allocation. This indicates a high exposure to equity market risks and potential rewards. While this can lead to significant growth, it also suggests vulnerability to stock market volatility. A small percentage is allocated to cash and other assets. Such a concentration in equities may suit investors seeking growth, but it’s important to assess if this aligns with risk tolerance. To mitigate risk, consider gradually incorporating other asset classes like bonds, which can provide stability.

Sectors Info

  • Technology
    24%
  • Financials
    16%
  • Industrials
    12%
  • Consumer Discretionary
    11%
  • Health Care
    10%
  • Telecommunications
    7%
  • Consumer Staples
    6%
  • Basic Materials
    5%
  • Energy
    4%
  • Utilities
    3%
  • Real Estate
    2%

The sector allocation is diverse, with significant exposure to technology (23.87%), financial services (16.23%), and industrials (11.79%). This indicates a focus on sectors with growth potential, balanced by exposure to more stable sectors like healthcare and consumer defensive. While this diversification can help manage sector-specific risks, it’s important to monitor sector performance and trends. Regularly reviewing sector allocations can help ensure they align with changing market conditions and personal investment goals. Consider rebalancing periodically to maintain desired exposure levels.

Regions Info

  • North America
    39%
  • Europe Developed
    29%
  • Asia Emerging
    14%
  • Asia Developed
    8%
  • Japan
    4%
  • Africa/Middle East
    3%
  • Latin America
    2%
  • Australasia
    1%
  • Europe Emerging
    1%

Geographically, the portfolio is well-diversified, with significant allocations to North America (38.89%) and Europe Developed (29.01%). This broad geographic exposure helps capture growth opportunities across various regions. However, it also exposes the portfolio to currency and geopolitical risks. While diversification across regions can mitigate some risks, it's crucial to stay informed about global economic trends. To further enhance geographic diversification, consider monitoring regional performance and adjusting allocations as needed to align with long-term objectives.

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 be optimized for higher expected returns of 13.21% with an increased risk level of 16.47%. This suggests potential for greater efficiency by reallocating assets. However, optimization should align with risk tolerance and financial goals. Moving along the efficient frontier can help achieve desired risk and return levels. Consider focusing on diversification and risk management before pursuing higher returns. Regularly reviewing portfolio composition and performance can aid in making informed adjustments.

Ongoing product costs Info

  • iShares MSCI Europe ESG Enhanced UCITS ETF EUR Acc 0.12%
  • iShares EURO Total Market Growth Large UCITS 0.40%
  • iShares Core MSCI Emerging Markets IMI UCITS 0.18%
  • Vanguard FTSE All-World UCITS ETF USD Accumulation 0.22%
  • Weighted costs total (per year) 0.22%

The total expense ratio (TER) for the portfolio is 0.22%, which is relatively low and indicates cost-efficient management. Keeping costs low is crucial for maximizing net returns over time. The cost efficiency of this portfolio is a positive aspect, as high fees can erode returns. Understanding the impact of costs is vital for long-term investment success. To maintain cost-effectiveness, consider regularly reviewing fund fees and exploring lower-cost alternatives if necessary. This can help enhance overall portfolio performance.

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