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A globally diversified portfolio with a focus on equities and moderate risk exposure

Report created on Feb 28, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification
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Positions

The portfolio is predominantly composed of equities, with the Vanguard FTSE All-World UCITS ETF USD Accumulation making up 70% and the Vanguard S&P 500 UCITS Acc at 20%. A smaller allocation of 10% is in the Vanguard Global Aggregate Bond UCITS ETF USD Hedged Accumulation. This structure aligns with a balanced profile, offering exposure to global equity markets while maintaining a buffer in bonds for risk management. Compared to typical benchmarks, this allocation is more equity-heavy, which can lead to higher potential returns but also increased volatility.

Growth Info

Historically, the portfolio has delivered a strong CAGR of 11.26%, indicating robust growth over time. However, it has also experienced a maximum drawdown of -30.80%, highlighting periods of significant volatility. Compared to benchmarks, the portfolio's performance reflects a higher risk-return profile, suitable for investors willing to endure short-term losses for long-term gains. It's important to note that past performance does not guarantee future results, and investors should be prepared for potential fluctuations.

Projection Info

The Monte Carlo simulation, which uses historical data to project future outcomes, suggests a wide range of potential results. With a 50th percentile end portfolio value of 198.4% and a 67th percentile of 297.8%, the portfolio has a high likelihood of positive returns. Out of 1,000 simulations, 969 resulted in positive outcomes, indicating a strong probability of success. However, it's crucial to remember that these projections are based on past data and do not account for unforeseen market changes.

Asset classes Info

  • Stocks
    90%
  • Bonds
    10%

The portfolio is heavily weighted towards equities, comprising 90%, with bonds making up the remaining 10%. This allocation offers growth potential but also increases exposure to market volatility. Compared to standard benchmarks, the portfolio's asset class distribution leans more towards equities, which can be beneficial in bull markets but risky during downturns. A more balanced allocation might include additional bond exposure for stability.

Sectors Info

  • Technology
    24%
  • Financials
    15%
  • Consumer Discretionary
    10%
  • Health Care
    9%
  • Industrials
    8%
  • Telecommunications
    8%
  • Consumer Staples
    5%
  • Energy
    3%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    2%

The sector allocation is tech-heavy, with 24% in Technology, followed by Financial Services at 15% and Consumer Cyclicals at 10%. This concentration in tech can lead to higher volatility, especially during interest rate hikes or tech sector downturns. Compared to benchmarks, the portfolio's sector distribution is slightly more concentrated, which may impact diversification. To mitigate sector-specific risks, consider diversifying into underrepresented sectors.

Regions Info

  • North America
    67%
  • Europe Developed
    10%
  • Japan
    4%
  • Asia Emerging
    4%
  • Asia Developed
    3%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is heavily weighted towards North America at 67%, with Europe Developed at 10% and smaller allocations across other regions. This concentration in North America could expose the portfolio to region-specific risks, such as economic downturns or policy changes. Compared to global benchmarks, the portfolio's geographic distribution is less diversified. Increasing exposure to emerging markets could enhance diversification and reduce regional risk.

Market capitalization Info

  • Mega-cap
    42%
  • Large-cap
    31%
  • Mid-cap
    16%

The portfolio's market capitalization is primarily in mega-cap stocks at 42%, followed by big caps at 31% and medium caps at 16%. This focus on larger companies provides stability but may limit growth potential compared to portfolios with more small-cap exposure. Compared to benchmarks, the portfolio's market cap distribution is more conservative, which can be advantageous during market volatility but may underperform in high-growth environments.

Redundant positions Info

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

The portfolio contains highly correlated assets, particularly between the Vanguard S&P 500 UCITS Acc and the Vanguard FTSE All-World UCITS ETF USD Accumulation. High correlation can limit diversification benefits, as these assets tend to move together, especially during market downturns. Reducing overlap by diversifying into less correlated assets can enhance risk management and improve the portfolio's resilience to market fluctuations.

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.

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This portfolio could be optimized using the Efficient Frontier, focusing on achieving the best possible risk-return ratio. Currently, the portfolio's high correlation between assets may limit its efficiency. By adjusting the allocation to include less correlated assets, the portfolio can potentially achieve a more favorable balance of risk and return. Remember, efficiency here refers to maximizing returns for a given level of risk, not necessarily diversification alone.

Ongoing product costs Info

  • Vanguard Global Aggregate Bond UCITS ETF USD Hedged Accumulation 0.10%
  • Vanguard S&P 500 UCITS Acc 0.07%
  • Vanguard FTSE All-World UCITS ETF USD Accumulation 0.22%
  • Weighted costs total (per year) 0.18%

The portfolio's total expense ratio (TER) is 0.18%, which is impressively low and aligns with best practices for cost efficiency. Lower costs support better long-term performance by minimizing the drag on returns. Compared to industry averages, this TER is highly competitive, ensuring more of the portfolio's growth is retained by the investor. Maintaining low costs is crucial for maximizing returns, especially in a long-term investment strategy.

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