A balanced portfolio with strong US exposure and low-cost ETFs

Report created on Jan 4, 2025

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 of two ETFs: Vanguard S&P 500 UCITS Acc and Vanguard FTSE All-World UCITS ETF USD Accumulation, each making up 50% of the holdings. This structure reflects a balanced approach, focusing heavily on U.S. equities while maintaining global exposure. Compared to common benchmarks, this composition aligns well with a diversified strategy, offering exposure to a broad range of sectors and regions. The equal weighting between the two ETFs simplifies rebalancing and management. To enhance diversification further, consider introducing other asset classes, such as bonds or real estate, which can provide stability during market volatility.

Growth Info

Historically, the portfolio has performed well, with a Compound Annual Growth Rate (CAGR) of 13.92%. This indicates robust growth, especially when compared to typical market benchmarks. The maximum drawdown of -29.58% highlights the portfolio's vulnerability during downturns, which is typical for equity-heavy portfolios. Despite this, the concentrated days that make up 90% of returns suggest that timing plays a significant role in achieving these returns. Investors should be aware that past performance does not guarantee future results, and maintaining a long-term perspective can help navigate market fluctuations.

Projection Info

Forward projections using Monte Carlo simulations, which analyze potential future outcomes based on historical data, show promising results. With a median expected growth of 453.29% and a high probability of positive returns, the portfolio demonstrates a strong potential for future appreciation. However, it's essential to recognize that these projections are not guarantees, as they rely on historical patterns. Investors should remain aware of market changes and be prepared to adjust their strategies as needed to align with evolving economic conditions.

Asset classes Info

  • Stocks
    100%

The portfolio is almost entirely composed of stocks, with a minimal allocation to other asset classes. This high concentration in equities suggests potential for significant growth but also exposes the portfolio to higher volatility. Compared to a typical balanced portfolio, which might include bonds or cash for stability, this allocation may result in more pronounced fluctuations. To mitigate risks, investors could consider diversifying into other asset classes, which can help balance returns and provide a buffer during market downturns.

Sectors Info

  • Technology
    29%
  • Financials
    15%
  • Consumer Discretionary
    11%
  • Health Care
    10%
  • Industrials
    9%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    3%
  • Utilities
    3%
  • Real Estate
    2%

Sector allocation is diverse, with a notable tilt towards technology at 29.24%. This concentration may lead to heightened volatility, especially during periods of technological disruption or regulatory changes. Financial services and consumer cyclicals also represent significant portions. Compared to benchmarks, the sector balance is relatively aligned but could benefit from further diversification. Investors might consider adjusting sector weights to reduce potential risks associated with overexposure to any single sector, ensuring a more balanced risk profile.

Regions Info

  • North America
    83%
  • Europe Developed
    7%
  • Japan
    3%
  • Asia Emerging
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

The portfolio is heavily weighted towards North America, comprising 83.33% of geographic allocation. This strong U.S. focus can enhance returns during periods of American market strength but may limit exposure to growth opportunities in other regions. While European and Asian markets are represented, their allocations are relatively minor. Investors seeking greater geographic diversification might consider increasing exposure to emerging markets or other developed regions, which can provide additional growth prospects and reduce reliance on the U.S. economy.

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 is well-positioned on the Efficient Frontier, which represents the optimal risk-return balance for the given asset allocation. By focusing on low-cost, diversified ETFs, the portfolio achieves a commendable risk-return ratio. However, further optimization could be explored by adjusting the weights between the two ETFs or introducing additional asset classes to fine-tune the risk profile. Investors should regularly review their portfolio to ensure it remains aligned with their risk tolerance and investment objectives.

Ongoing product costs Info

  • Vanguard S&P 500 UCITS Acc 0.07%
  • Vanguard FTSE All-World UCITS ETF USD Accumulation 0.22%
  • Weighted costs total (per year) 0.14%

The portfolio's total expense ratio (TER) is impressively low at 0.14%, thanks to the use of Vanguard ETFs known for their cost efficiency. This low cost structure supports better long-term performance by minimizing the drag on returns. Compared to portfolios with higher fees, this allocation maximizes the potential for compounding growth over time. Investors should continue to monitor costs and consider replacing any higher-fee assets with similar, more cost-effective options to further enhance net returns.

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