Balanced portfolio with a strong focus on defense sector and high US market exposure

Report created on Aug 7, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

This portfolio is predominantly invested in ETFs, with a significant concentration in the S&P 500 and defense sector ETFs, comprising nearly 98% of the total allocation. The Vanguard FTSE All-World UCITS ETF, intended for global diversification, constitutes a minor portion. This composition suggests a focused approach towards US equities and the defense industry, with limited global diversification. The portfolio's diversification score reflects a moderate level, indicating room for improvement in spreading risk across different asset classes and sectors.

Growth Info

The portfolio has shown a robust Compound Annual Growth Rate (CAGR) of 25.78%, with a maximum drawdown of -15.58%. This performance indicates a strong upward trend in value, albeit with significant volatility. The days contributing to 90% of returns highlight the portfolio's susceptibility to short-term market movements. Comparing this performance to benchmarks could help assess its relative strength, especially considering the high risk-return profile indicated by the portfolio's risk score.

Projection Info

Monte Carlo simulations project a wide range of potential outcomes, with the median simulation suggesting substantial growth. This forward-looking analysis, based on historical data, underscores the portfolio's high-growth potential but also reflects considerable uncertainty. It's crucial to understand that such projections are hypothetical and subject to market volatility. Diversifying further could mitigate some of the risks associated with this high variance in potential outcomes.

Asset classes Info

  • Stocks
    100%

The portfolio is entirely allocated to stocks, with no exposure to other asset classes like bonds or real estate. This allocation strategy maximizes growth potential but also increases volatility and risk. Considering the balanced risk profile, incorporating a mix of asset classes could provide more stability, especially during market downturns, and possibly enhance long-term returns by reducing volatility.

Sectors Info

  • Industrials
    33%
  • Technology
    32%
  • Financials
    9%
  • Consumer Discretionary
    6%
  • Telecommunications
    6%
  • Health Care
    6%
  • Consumer Staples
    3%
  • Energy
    2%
  • Utilities
    1%
  • Real Estate
    1%
  • Basic Materials
    1%

The sectoral allocation heavily favors industrials and technology, with significant investments in the defense sector. This concentration enhances exposure to sector-specific risks and opportunities, potentially leading to higher volatility. Broadening the sectoral coverage could help in achieving a more balanced risk-return profile, especially by increasing allocations to underrepresented sectors that offer growth potential or stability.

Regions Info

  • North America
    82%
  • Europe Developed
    12%
  • Asia Developed
    4%
  • Africa/Middle East
    1%

With 82% of assets in North America and minimal exposure to emerging markets, the portfolio's geographic distribution is heavily skewed towards developed markets, particularly the US. This concentration benefits from the robust performance of the US market but also limits global diversification. Increasing exposure to emerging and other developed markets could offer additional growth opportunities and risk mitigation.

Market capitalization Info

  • Large-cap
    41%
  • Mega-cap
    33%
  • Mid-cap
    20%
  • Small-cap
    6%

The portfolio's market capitalization exposure leans towards big and mega-cap stocks, offering stability and potential for steady growth. However, the limited exposure to small and micro-caps restricts opportunities for higher growth rates these segments can offer. Balancing the allocation to include more medium and small-cap stocks could enhance growth prospects and diversification.

Redundant positions Info

  • Vanguard FTSE All-World UCITS ETF
    iShares Core S&P 500 UCITS ETF USD (Acc)
    High correlation

The high correlation between the Vanguard FTSE All-World UCITS ETF and the iShares Core S&P 500 UCITS ETF indicates overlapping investments, reducing the diversification benefits. Identifying and reducing such overlaps can enhance portfolio efficiency by ensuring each investment contributes to diversification, potentially lowering overall risk without sacrificing returns.

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.

Optimizing the portfolio along the Efficient Frontier could improve the risk-return profile. Currently, the portfolio's high concentration in specific sectors and geographies, combined with the overlap in ETF holdings, suggests it may not be positioned optimally. Adjusting the asset allocation to reduce overlap and enhance diversification across sectors, geographies, and asset classes could lead to better risk-adjusted returns.

Dividends Info

  • Vanguard FTSE All-World UCITS ETF 1.60%
  • Weighted yield (per year) 0.04%

The portfolio's overall dividend yield is low, reflecting its growth-oriented strategy. While reinvesting dividends has contributed to the portfolio's growth, investors seeking regular income might consider increasing allocations to assets with higher dividend yields. This adjustment could provide a steady income stream while still participating in the portfolio's growth potential.

Ongoing product costs Info

  • iShares Core S&P 500 UCITS ETF USD (Acc) 0.12%
  • Vanguard FTSE All-World UCITS ETF 0.22%
  • Weighted costs total (per year) 0.08%

The portfolio's costs are relatively low, which is beneficial for long-term performance. The Total Expense Ratio (TER) of the underlying ETFs is modest, ensuring that a larger portion of the returns is retained. Continuing to monitor and minimize investment costs will remain crucial in maximizing net returns over time.

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