Balanced Portfolio with Strong Tech Focus and High North American Exposure Reflects Moderate Risk Appetite

Report created on Jun 17, 2024

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

Positions

The portfolio consists of four ETFs, with a 40% allocation to the Vanguard FTSE All-World UCITS ETF, and three 20% allocations to iShares NASDAQ 100, Vanguard S&P 500, and VanEck Semiconductor ETFs. This composition provides broad diversification across global markets, with a strong emphasis on technology stocks. ETFs are generally low-cost, passive investment vehicles that track various indices, offering good exposure to different market segments. This portfolio is well-diversified across sectors and regions, although it leans heavily towards technology. To improve diversification, consider balancing exposure across more sectors.

Growth Info

Historically, the portfolio has performed well, with a compound annual growth rate (CAGR) of 18.21% and a maximum drawdown of -23.8%. This indicates strong growth potential but also significant volatility. The portfolio's performance is concentrated in a few high-return days, which suggests reliance on market timing. While past performance is not indicative of future results, it provides insight into the portfolio's risk-return profile. To mitigate risk, consider diversifying into assets with lower volatility and more consistent returns.

Projection Info

Using a Monte Carlo simulation with 1,000 simulations, the portfolio shows a wide range of potential outcomes, with a 50th percentile return of 1,080.42% and a 5th percentile return of 223.32%. This reflects the uncertainty and variability inherent in financial markets. Monte Carlo simulations use random sampling to predict future outcomes based on historical data. While the portfolio shows promising potential returns, the variability suggests a need for careful risk management. To enhance stability, consider including assets with lower correlations to existing holdings.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted towards stocks, comprising 99.96% of the total allocation. This indicates a strong growth orientation but also exposes the portfolio to market volatility. Stocks offer the potential for high returns but come with higher risk compared to other asset classes like bonds. A well-balanced portfolio typically includes a mix of asset classes to manage risk and achieve long-term growth. Consider incorporating fixed income or alternative investments to reduce volatility and enhance diversification.

Sectors Info

  • Technology
    47%
  • Financials
    9%
  • Consumer Discretionary
    9%
  • Telecommunications
    8%
  • Health Care
    8%
  • Industrials
    6%
  • Consumer Staples
    5%
  • Energy
    2%
  • Basic Materials
    2%
  • Utilities
    2%
  • Real Estate
    1%

Sector allocation is heavily skewed towards technology, which accounts for 46.87% of the portfolio. This concentration can lead to increased volatility, especially in the event of sector-specific downturns. While technology has driven significant growth in recent years, overexposure to a single sector can increase risk. A diversified sector allocation can provide stability and reduce reliance on any single market segment. Consider reallocating some of the technology exposure to other sectors to enhance stability and reduce risk.

Regions Info

  • North America
    81%
  • Europe Developed
    9%
  • Asien
    4%
  • Asien Schwellenländer
    3%
  • Japan
    2%
  • Australasia
    1%
  • Latin America
    1%
  • Afrika/Mittlerer Osten
    1%

Geographically, the portfolio is predominantly invested in North America, which makes up 80.90% of the allocation. This concentration reflects confidence in the North American market but also exposes the portfolio to regional economic and political risks. Geographic diversification can help mitigate these risks and capture growth opportunities in other regions. While North America has been a strong performer, consider increasing exposure to other regions like Europe and Asia to balance the portfolio and reduce regional risk.

Redundant positions Info

  • iShares NASDAQ 100 UCITS ETF USD (Acc)
    Vanguard FTSE All-World UCITS ETF USD Accumulation
    Vanguard S&P 500 UCITS ETF
    High correlation

The portfolio exhibits high correlations among its assets, particularly between the iShares NASDAQ 100, Vanguard FTSE All-World, and Vanguard S&P 500 ETFs. High correlations mean that these assets tend to move in the same direction, which can amplify portfolio volatility. Diversifying into assets with low or negative correlations can help reduce overall risk and smooth out returns. Consider exploring investments that provide diversification benefits by not being closely tied to the performance of the current holdings.

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 is currently not on the efficient frontier due to high correlations among its assets. The efficient frontier represents the set of optimal portfolios that offer the highest expected return for a defined level of risk. By reducing overlap and enhancing diversification, the portfolio can move closer to the efficient frontier, improving its risk-return profile. However, given the strong tech focus and North American bias, achieving optimal diversification may require strategic adjustments. Consider rebalancing to achieve better risk-adjusted returns.

Dividends Info

  • Vanguard S&P 500 UCITS ETF 0.80%
  • Weighted yield (per year) 0.16%

The portfolio's dividend yield is relatively low, at 0.16%, with the Vanguard S&P 500 ETF contributing 0.8% to this figure. Low dividend yields suggest a focus on growth rather than income generation. For investors seeking regular income, dividends can provide a steady cash flow. However, growth-oriented portfolios typically prioritize capital appreciation over income. If income generation is a priority, consider adding dividend-focused investments to enhance yield and provide a more balanced return profile.

Ongoing product costs Info

  • iShares NASDAQ 100 UCITS ETF USD (Acc) 0.36%
  • Vanguard S&P 500 UCITS ETF 0.07%
  • VanEck Semiconductor UCITS ETF 0.35%
  • Vanguard FTSE All-World UCITS ETF USD Accumulation 0.22%
  • Weighted costs total (per year) 0.24%

The portfolio's total expense ratio (TER) is 0.24%, which is relatively low and reflects the cost-effectiveness of ETFs. Low costs are crucial for maximizing net returns, as high fees can erode investment gains over time. The TER is an important factor to consider when evaluating investment options, as it directly impacts the overall performance. Maintaining a low-cost structure is beneficial for long-term growth. Continue to monitor and manage investment costs to ensure they remain competitive and aligned with financial goals.

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