Balanced portfolio with a focus on technology and dividends across major markets

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

What type of investor this portfolio is suitable for

Balanced Investors

This portfolio suits an investor with a balanced risk tolerance, seeking growth through equity investments while appreciating the stability and income provided by dividends. The investor likely has a long-term horizon, allowing them to weather short-term volatility in pursuit of appreciable capital growth. This type of investor is comfortable with the inherent risks of stock market investments but prefers a foundation in more stable, large-cap stocks and developed markets to mitigate excessive volatility.

Positions

  • iShares Euro Dividend UCITS ETF EUR (Dist) EUR
    IQQA - IE00B0M62S72
    25.00%
  • iShares VII PLC - iShares Core EURO STOXX 50 ETF EUR Acc EUR
    SXRT - IE00B53L3W79
    25.00%
  • iShares NASDAQ 100 UCITS ETF USD (Acc)
    SXRV - IE00B53SZB19
    25.00%
  • Xtrackers MSCI World Information Technology UCITS ETF 1C
    XDWT - IE00BM67HT60
    25.00%

This portfolio is evenly split among four ETFs, focusing on European dividends, the Euro STOXX 50, the NASDAQ 100, and global technology stocks. Such an allocation indicates a preference for equity investments across diverse geographic regions and sectors, albeit with a significant tilt towards technology. The portfolio's diversification is moderate, as evidenced by its diversification score, but it's concentrated in terms of asset classes, with stocks making up 100% of the allocation. This structure suggests a balanced risk profile, aiming to capture growth while seeking income through dividends.

Growth Info

Historically, this portfolio has achieved a Compound Annual Growth Rate (CAGR) of 15.03%, with a maximum drawdown of -33.09%. These figures suggest a robust performance, with the potential for significant volatility. The days contributing to 90% of returns being concentrated in just 42 days indicates that the portfolio's performance can be highly variable, relying on sharp, positive market movements. Comparing these metrics to benchmarks could provide further insight into performance relative to market averages.

Projection Info

Monte Carlo simulations, using historical data to project future outcomes, show a wide range of potential performances for this portfolio. The 50th percentile outcome suggests a 585% return, indicating optimism for significant growth. However, the presence of a 5th percentile outcome at 95.4% underscores the risk of near-total loss. While these simulations offer valuable insight, it's crucial to remember that they are based on past data, which is not a perfect predictor of future performance.

Asset classes Info

  • Stocks
    100%
  • Cash
    0%
  • Other
    0%

The portfolio's allocation is entirely in stocks, lacking in bonds, real estate, or alternative investments. This concentration in one asset class enhances exposure to market volatility and economic cycles. Diversifying across different asset classes can reduce risk and smooth out returns over time, as different assets react differently to market conditions.

Sectors Info

  • Technology
    42%
  • Financials
    18%
  • Industrials
    10%
  • Consumer Discretionary
    9%
  • Telecommunications
    7%
  • Utilities
    4%
  • Consumer Staples
    4%
  • Health Care
    3%
  • Energy
    3%
  • Basic Materials
    1%
  • Real Estate
    0%

With a 42% allocation to technology and significant investments in financial services and industrials, the portfolio is positioned to benefit from growth in these sectors. However, this concentration increases susceptibility to sector-specific risks. Diversifying more evenly across sectors could mitigate this risk, ensuring that the portfolio is not overly dependent on the performance of a few sectors.

Regions Info

  • Europe Developed
    51%
  • North America
    48%
  • Japan
    1%
  • Latin America
    0%
  • Asia Emerging
    0%
  • Asia Developed
    0%
  • Australasia
    0%
  • Africa/Middle East
    0%

The geographic allocation is predominantly in developed markets, with a near-equal split between Europe and North America. This focus on developed markets provides stability and access to mature companies. However, the negligible exposure to emerging markets, Asia Pacific, and other regions may limit growth potential and diversification benefits from different economic cycles and growth patterns.

Market capitalization Info

  • Mega-cap
    55%
  • Large-cap
    33%
  • Mid-cap
    10%
  • Small-cap
    0%

The emphasis on mega and big-cap stocks (88% combined) aligns with the portfolio's balanced risk profile, as these companies are typically more stable and less volatile than smaller companies. However, this focus may limit opportunities for higher growth rates that medium or small-cap stocks can offer, suggesting a potential area for diversification.

Redundant positions Info

  • iShares NASDAQ 100 UCITS ETF USD (Acc)
    Xtrackers MSCI World Information Technology UCITS ETF 1C
    High correlation

The high correlation between the NASDAQ 100 and World Information Technology ETFs indicates redundancy, as these investments often move in tandem. This redundancy limits the portfolio's diversification benefits, especially during market downturns. Reducing overlap by reallocating assets could enhance the portfolio's risk-adjusted returns.

Dividends Info

  • iShares Euro Dividend UCITS ETF EUR (Dist) EUR 4.40%
  • Weighted yield (per year) 1.10%

The portfolio's dividend yield, driven by the iShares Euro Dividend UCITS ETF, contributes to its income generation, complementing growth from capital gains. This balanced approach supports the portfolio's risk profile, providing a steady income stream while still participating in market appreciation. However, the overall yield could be optimized to better balance income and growth objectives.

Ongoing product costs Info

  • iShares Euro Dividend UCITS ETF EUR (Dist) EUR 0.40%
  • iShares VII PLC - iShares Core EURO STOXX 50 ETF EUR Acc EUR 0.10%
  • iShares NASDAQ 100 UCITS ETF USD (Acc) 0.36%
  • Xtrackers MSCI World Information Technology UCITS ETF 1C 0.25%
  • Weighted costs total (per year) 0.28%

With a total expense ratio (TER) averaging 0.28%, the portfolio is cost-efficient, minimizing the drag on returns caused by fees. This efficiency is crucial for long-term growth, as even small differences in costs can significantly impact returns over time. The portfolio's cost structure is commendably lean, supporting better net performance.

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.

Optimizing the portfolio using the Efficient Frontier could further improve its risk-return ratio. Currently, the high correlation between certain assets suggests room for better diversification without necessarily sacrificing returns. By adjusting allocations to reduce overlap and potentially incorporating other asset classes or sectors, the portfolio could achieve a more efficient balance of risk and return.

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