A globally diversified cautious portfolio with balanced exposure to equities bonds and gold

Report created on Jan 24, 2025

Risk profile Info

3/7
Cautious
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification

Positions

The portfolio consists of three main components: 70% in equities via the Vanguard FTSE All-World UCITS ETF, 20% in bonds through the Vanguard Global Aggregate Bond UCITS ETF, and 10% in gold with the iShares Physical Gold ETC. This structure is well-aligned with a cautious risk profile, offering a balance between growth and stability. The equities provide growth potential, while bonds and gold add stability and diversification. Compared to typical benchmarks, the portfolio's composition supports a diversified approach, reducing reliance on any single asset class. Consider maintaining this balance to continue benefiting from diversified returns while managing risk.

Growth Info

Historically, the portfolio has shown a Compound Annual Growth Rate (CAGR) of 10.22%, indicating strong performance over time. This growth rate suggests that the portfolio has effectively captured market returns while managing risk, as evidenced by a maximum drawdown of -17.40%. Comparing this to benchmarks, the portfolio's performance is commendable, especially for a cautious profile. However, it's important to remember that past performance doesn't guarantee future results. To maintain this trajectory, continue monitoring market conditions and adjust allocations as needed to align with evolving financial goals.

Projection Info

Monte Carlo simulations, which use historical data to project future outcomes, indicate a wide range of potential returns. With 1,000 simulations, the median expected return is 168.9%, with a 5th percentile of -22.2% and a 67th percentile of 276.9%. This suggests that while the portfolio has a high likelihood of positive returns, there is still some risk of loss. These projections highlight the importance of maintaining a diversified portfolio to manage uncertainty. Keep in mind that simulations are based on historical data and may not fully capture future market conditions.

Asset classes Info

  • Stocks
    70%
  • Bonds
    20%
  • Other
    10%

The portfolio's allocation across asset classes includes 70% in stocks, 20% in bonds, and 10% in gold. This mix supports diversification, providing exposure to different economic cycles and reducing the impact of market volatility. Compared to typical benchmarks, this allocation aligns well with a cautious investor seeking steady growth with risk management. The inclusion of gold adds an extra layer of protection against inflation and market downturns. To enhance diversification, consider periodically reviewing asset class weights to ensure they remain aligned with your risk tolerance and investment goals.

Sectors Info

  • Technology
    18%
  • Financials
    12%
  • Consumer Discretionary
    7%
  • Health Care
    7%
  • Industrials
    7%
  • Telecommunications
    6%
  • Consumer Staples
    4%
  • Energy
    3%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    2%

The sector allocation is diverse, with notable weights in technology (18%), financial services (12%), and consumer cyclicals (7%). This distribution offers exposure to various economic sectors, balancing growth and defensive industries. Compared to common benchmarks, the portfolio's sector composition is well-aligned, supporting diversification. However, technology-heavy portfolios may experience higher volatility during interest rate hikes. To mitigate sector-specific risks, consider maintaining a balanced approach, ensuring no single sector dominates the portfolio. Regularly review sector trends to adjust allocations as needed.

Regions Info

  • North America
    47%
  • Europe Developed
    10%
  • Japan
    4%
  • Asia Emerging
    4%
  • Asia Developed
    3%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is predominantly exposed to North America (47%), with additional allocations to Europe Developed (10%) and Japan (4%). This distribution provides a solid global diversification, though it leans towards developed markets. Compared to benchmarks, the geographic allocation is well-balanced, reducing regional risks. However, limited exposure to emerging markets may mean missing out on potential growth opportunities. To enhance diversification, consider increasing exposure to underrepresented regions, ensuring the portfolio benefits from global economic trends while managing regional risks.

Market capitalization Info

  • Mega-cap
    33%
  • Large-cap
    24%
  • Mid-cap
    12%
  • No data
    10%

The portfolio's market capitalization exposure is concentrated in mega (33%) and big (24%) caps, with minimal allocation to small and micro caps. This focus on larger companies generally provides stability and lower volatility, aligning with a cautious investment profile. However, it may limit exposure to potentially higher-growth opportunities found in smaller companies. Compared to benchmarks, the allocation is typical for risk-averse investors. To enhance growth potential, consider gradually increasing exposure to mid and small caps, balancing risk and return while maintaining overall portfolio stability.

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 current portfolio could be optimized for a better risk-return ratio using the Efficient Frontier, which identifies the best possible allocation for a given risk level. Currently, the optimal portfolio offers an expected return of 12.65%, higher than the current expected return, with a risk level of 10.67%. This suggests that reallocating assets could enhance returns without increasing risk. Consider periodically reviewing the portfolio's allocation to ensure it stays efficient, balancing risk and return according to your financial goals and risk tolerance.

Ongoing product costs Info

  • iShares Physical Gold ETC 0.25%
  • Vanguard Global Aggregate Bond UCITS ETF GBP Hedged Accumulation 0.10%
  • Vanguard FTSE All-World UCITS ETF USD Accumulation 0.22%
  • Weighted costs total (per year) 0.20%

The portfolio's total expense ratio (TER) is 0.20%, which is quite low and supports better long-term performance by minimizing costs. This efficiency is beneficial for investors, as lower expenses mean more of the returns are retained. Compared to industry averages, the TER is competitive, aligning with best practices for cost management. However, always be vigilant about potential changes in fees. Regularly review portfolio costs to ensure they remain low, as this can significantly impact overall returns over time, especially for long-term investors.

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