A cautious yet diversified portfolio with a strong focus on global equities

Report created on Dec 28, 2024

Risk profile Info

3/7
Cautious
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification

Positions

The portfolio is composed of 60% global equities, 20% emerging markets, 14% bonds, 5% water-focused equities, and 1% Bitcoin. This composition reflects a balanced approach, prioritizing global equity exposure while incorporating bonds and niche sectors for diversification. Compared to typical cautious portfolios, it leans more toward equities, which might increase potential returns but also adds some volatility. Consider reviewing the weightings to ensure they align with your risk tolerance, particularly if market conditions shift.

Growth Info

Historically, the portfolio has achieved a compound annual growth rate (CAGR) of 7.32%, with a maximum drawdown of -15.32%. This performance indicates a solid return with moderate risk, aligning well with the cautious risk profile. Comparing this to benchmarks, the portfolio's returns are commendable, though the drawdown suggests vulnerability during market downturns. It's crucial to remember that past performance doesn't guarantee future results, so maintaining a diversified strategy is key to managing risks.

Projection Info

Monte Carlo simulations project a wide range of outcomes, using historical data to estimate future performance. With 1,000 simulations, the portfolio shows a median potential gain of 140.82% but also a possible loss of up to 53.93%. This illustrates the uncertainty inherent in investing, highlighting the importance of a diversified approach. While the median projection is optimistic, it's essential to prepare for less favorable scenarios by maintaining a balanced portfolio that can withstand market fluctuations.

Asset classes Info

  • Stocks
    86%
  • Bonds
    14%

The portfolio allocates approximately 86% to stocks and 14% to bonds, aligning with a growth-oriented strategy. This allocation suggests a focus on capital appreciation, with bonds providing some stability. Compared to typical cautious portfolios, this one has a higher stock allocation, which could lead to higher returns but also increases exposure to market volatility. To enhance stability, you might consider increasing the bond allocation, especially if market conditions become uncertain.

Sectors Info

  • Technology
    21%
  • Financials
    14%
  • Industrials
    10%
  • Consumer Discretionary
    9%
  • Health Care
    7%
  • Telecommunications
    7%
  • Consumer Staples
    5%
  • Utilities
    4%
  • Basic Materials
    3%
  • Energy
    3%
  • Real Estate
    2%
  • No data
    1%

Sector allocation shows a strong emphasis on technology (21%) and financial services (14%), with smaller allocations across other sectors. This concentration in tech could lead to higher volatility, especially during periods of regulatory changes or interest rate hikes. Balancing sector exposure by increasing allocations to more defensive sectors like consumer staples or utilities might help reduce volatility and provide more consistent returns across different market environments.

Regions Info

  • North America
    49%
  • Asia Emerging
    11%
  • Europe Developed
    11%
  • Asia Developed
    6%
  • Japan
    3%
  • Africa/Middle East
    2%
  • Latin America
    2%
  • Australasia
    1%
  • No data
    1%

Geographically, the portfolio is heavily weighted towards North America (49%), with significant exposure to emerging Asia (11%) and developed Europe (11%). This distribution offers broad global diversification but is underweight in regions like Latin America and Australasia. To enhance diversification and potentially capture growth in underrepresented regions, consider increasing exposure to these areas, particularly if economic conditions in those regions improve.

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 be optimized using the Efficient Frontier, which aims to achieve the best possible risk-return ratio. This involves adjusting the weightings of existing assets to improve efficiency, rather than adding new ones. By fine-tuning the balance between stocks and bonds, you can potentially enhance returns without significantly increasing risk. Regularly reassessing the portfolio's position on the Efficient Frontier can ensure it remains aligned with your investment goals.

Dividends Info

  • iShares Global Aggregate Bond UCITS Dist 1.50%
  • iShares MSCI Emerging Markets UCITS Dist 2.40%
  • iShares Global Water UCITS 1.10%
  • Weighted yield (per year) 0.74%

The portfolio's dividend yield is relatively low at 0.74%, reflecting its focus on growth rather than income. While dividends can provide a steady income stream, they are less critical for growth-focused portfolios. However, if income generation becomes a priority, consider increasing exposure to higher-yielding assets, such as dividend-focused ETFs or bonds, to enhance the portfolio's income potential without significantly altering its risk profile.

Ongoing product costs Info

  • iShares Core MSCI World UCITS ETF USD (Acc) 0.20%
  • iShares Global Aggregate Bond UCITS Dist 0.10%
  • iShares MSCI Emerging Markets UCITS Dist 0.18%
  • iShares Global Water UCITS 0.65%
  • Weighted costs total (per year) 0.20%

With a total expense ratio (TER) of 0.2%, the portfolio is cost-efficient, supporting better long-term returns. Low costs are crucial for maximizing net returns, especially in cautious portfolios. This cost efficiency aligns well with best practices, allowing more of your investment to compound over time. Regularly reviewing and comparing fund fees can help maintain this advantage, ensuring that the portfolio remains cost-effective as market conditions and investment options evolve.

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