A balanced portfolio with a strong focus on North America and technology sectors

Report created on Dec 27, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

This portfolio is primarily composed of ETFs, with a significant 40% allocation to the iShares Core S&P 500. The remaining holdings are diversified across European, emerging markets, small-cap, and sector-specific ETFs. This composition reflects a balanced approach, aligning with common benchmark allocations that emphasize large-cap U.S. equities. A notable aspect is the 5% allocation to physical gold, providing a hedge against market volatility. While the portfolio is broadly diversified, the high concentration in U.S. equities may limit exposure to other potentially high-growth regions.

Growth Info

Historically, the portfolio has delivered a strong CAGR of 11.92%, outpacing many traditional benchmarks. This performance indicates effective asset selection and allocation strategies. However, it's essential to note the maximum drawdown of -16.24%, which highlights the potential for significant short-term losses. This historical performance suggests a robust growth trajectory but also underscores the need for risk management. Investors should consider maintaining this asset mix to capitalize on growth while being prepared for market fluctuations.

Projection Info

Forward projections using Monte Carlo simulations show a wide range of potential outcomes, with the 50th percentile projecting a 305.17% return. Monte Carlo simulation uses historical data to model possible future returns, providing a probabilistic view of potential portfolio growth. While the average annualized return of 11.72% is promising, it's crucial to understand that these projections are not guarantees. Investors should use these insights to remain realistic about future performance and consider adjustments if they align with their risk tolerance and financial goals.

Asset classes Info

  • Stocks
    95%
  • Other
    5%

The portfolio is heavily weighted towards stocks, comprising over 94% of the total allocation, with a small allocation to gold as an alternative asset. This stock-heavy allocation aligns with a growth-oriented strategy but may expose the portfolio to market volatility. Compared to benchmarks, this allocation is typical for a balanced profile, though slightly higher in equities. Investors may consider introducing more fixed-income or alternative assets to reduce risk and enhance stability, especially in volatile markets.

Sectors Info

  • Technology
    29%
  • Financials
    14%
  • Industrials
    11%
  • Consumer Discretionary
    10%
  • Health Care
    9%
  • Telecommunications
    6%
  • Consumer Staples
    5%
  • Basic Materials
    3%
  • Energy
    3%
  • Real Estate
    3%
  • Utilities
    2%

The portfolio has a strong focus on the technology sector, representing nearly 30% of the allocation, which is significantly higher than typical benchmarks. This concentration can lead to higher returns during tech booms but also increases vulnerability to sector-specific downturns. Other sectors like financial services and industrials provide some diversification, but the overall sector balance could be improved. Investors might explore increasing exposure to underrepresented sectors to mitigate risk and enhance diversification.

Regions Info

  • North America
    66%
  • Europe Developed
    17%
  • Asia Emerging
    5%
  • Asia Developed
    3%
  • Japan
    1%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is tilted towards North America, with over 66% allocation, primarily through U.S. equities. This aligns with global benchmarks but may limit exposure to potential growth in other regions. European and emerging markets are represented but at lower levels. This geographic concentration can be advantageous if North American markets perform well but poses a risk if they underperform. To enhance diversification, investors could consider increasing allocations to regions like Asia and Latin America.

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 could be optimized further using the Efficient Frontier, which suggests a potential return of 17.88% with the same risk level. The Efficient Frontier represents the set of optimal portfolios offering the highest expected return for a given level of risk. By adjusting the current asset allocation, investors might achieve a more favorable risk-return ratio. However, it's essential to balance this with other investment goals, such as diversification and income generation.

Ongoing product costs Info

  • iShares Core MSCI Emerging Markets IMI UCITS 0.18%
  • iShares MSCI World Small Cap UCITS ETF USD (Acc) 0.35%
  • Amundi Stoxx Europe 600 UCITS ETF C EUR 0.07%
  • iShares S&P 500 USD Information Technology Sector UCITS 0.15%
  • SSgA SPDR S&P 400 US Mid Cap 0.30%
  • iShares Core S&P 500 UCITS ETF USD (Acc) 0.12%
  • Weighted costs total (per year) 0.16%

Portfolio costs are impressively low, with a Total Expense Ratio (TER) of 0.16%. This cost efficiency supports better long-term performance by minimizing the drag on returns. Low costs are a significant advantage, aligning with best practices for maximizing net returns. Investors should continue to monitor expense ratios and consider replacing higher-cost assets with lower-cost alternatives if available, ensuring the portfolio remains cost-effective.

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