Portfolio with Growth Focus Shows High Risk and Broad Diversification for Adventurous Investors

Report created on Nov 22, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio is composed of four main positions, with a significant 50% allocation to the Vanguard FTSE All-World UCITS ETF. This indicates a strong preference for global exposure. The Vanguard S&P 500 UCITS Acc and iShares Core MSCI Europe UCITS ETF EUR (Acc) make up 20% and 15% respectively, providing a solid foundation in North American and European markets. A notable 15% is allocated to the WisdomTree Physical Bitcoin ETF, adding a layer of alternative asset class exposure. This composition suggests a strategy aiming for growth through diversification across regions and asset classes, while embracing a degree of risk.

Growth Info

Historically, the portfolio has demonstrated robust performance with a compound annual growth rate (CAGR) of 11.12%. A hypothetical initial investment would have grown significantly over the years, although it experienced a maximum drawdown of -18.86%, highlighting its volatility. The days that make up 90% of returns being only 11 indicates a portfolio reliant on key market movements. This historical performance suggests a high potential for growth, but with the caveat of substantial risk during downturns. To optimize returns, maintaining a long-term perspective and staying informed on market trends is advisable.

Projection Info

Using a Monte Carlo simulation with 1,000 iterations, the projected outcomes for a hypothetical initial investment vary widely, with a 5th percentile return of -89.33% and a 67th percentile return of 187.71%. The median simulation projects a 53.31% return, suggesting a broad range of possibilities. The annualized return across all simulations is 11.29%, consistent with historical performance. This simulation underscores the portfolio's potential for high returns, albeit with significant risk. Investors should be prepared for volatility and consider their risk tolerance when planning future contributions or withdrawals.

Asset classes Info

  • Stocks
    85%
  • Other
    15%

The portfolio's asset class distribution heavily favors stocks, making up 84.83% of the total. The remaining 15% is allocated to other asset classes, primarily through the Bitcoin ETF. This allocation suggests a strong growth-oriented strategy, leveraging the historical performance of equities to drive returns. The minimal allocation to bonds and cash indicates a higher risk tolerance. For those seeking to mitigate risk, incorporating more fixed-income assets could provide stability. However, the current allocation aligns with a growth-focused investment approach.

Sectors Info

  • Technology
    20%
  • Financials
    14%
  • Health Care
    10%
  • Industrials
    9%
  • Consumer Discretionary
    9%
  • Telecommunications
    6%
  • Consumer Staples
    6%
  • Energy
    3%
  • Basic Materials
    3%
  • Utilities
    3%
  • Real Estate
    2%

Sector allocation within the portfolio is well-diversified, with technology leading at 20.44%, followed by financial services and healthcare. Such diversification reduces the risk associated with sector-specific downturns. However, the heavy weighting in technology suggests a reliance on this sector's continued growth. Investors should be aware of the cyclical nature of sectors and consider rebalancing if certain sectors outperform or underperform significantly over time. Maintaining a watchful eye on sector trends can help in making informed decisions about potential adjustments.

Regions Info

  • North America
    52%
  • Europe Developed
    22%
  • Asia Emerging
    3%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is diversified with over half of the exposure in North America, followed by Europe Developed and smaller allocations to Asia and other regions. This distribution reflects a strong belief in the stability and growth potential of developed markets, particularly the U.S. While this offers a robust foundation, emerging markets are underrepresented, which could limit exposure to high-growth regions. Investors might consider diversifying geographically to capture opportunities in emerging markets, balancing the portfolio's growth potential with geographic risk.

Redundant positions Info

  • Vanguard S&P 500 UCITS Acc
    Vanguard FTSE All-World UCITS ETF USD Accumulation
    High correlation

The portfolio exhibits high correlation between the Vanguard S&P 500 UCITS Acc and Vanguard FTSE All-World UCITS ETF, indicating overlapping exposure. This correlation suggests that these assets may react similarly to market changes, potentially reducing diversification benefits. To enhance diversification, consider reducing overlap by introducing assets with lower correlation to existing holdings. This strategy could help mitigate risk while maintaining the portfolio's growth orientation. Monitoring asset correlations regularly can provide insights into potential adjustments for optimizing portfolio 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.

Click on the colored dots to explore allocations.

Portfolio optimization involves aligning investments with the efficient frontier, balancing risk and return. This portfolio exhibits high correlation between certain assets, suggesting limited diversification benefits. While the current allocation is growth-focused, further diversification could enhance performance. Introducing assets with lower correlation can improve risk-adjusted returns. However, given the portfolio's broad diversification and growth orientation, significant changes may not be necessary. Regular reviews and minor adjustments can help maintain alignment with the efficient frontier, optimizing the portfolio's potential.

Ongoing product costs Info

  • iShares Core MSCI Europe UCITS ETF EUR (Acc) 0.20%
  • Vanguard S&P 500 UCITS Acc 0.07%
  • Vanguard FTSE All-World UCITS ETF USD Accumulation 0.22%
  • Weighted costs total (per year) 0.15%

The portfolio's total expense ratio (TER) is relatively low at 0.15%, indicating cost-effective management. The individual TERs of the ETFs range from 0.07% to 0.22%, reflecting a focus on minimizing investment costs. Keeping costs low is essential for maximizing net returns over time. Investors should continue to monitor expense ratios and consider the impact of fees on overall performance. While the current cost structure is efficient, exploring opportunities to further reduce costs can contribute to enhanced portfolio returns.

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