A balanced portfolio with a focus on Sharia-compliant investments and moderate diversification

Report created on Jan 5, 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 evenly split between two Sharia-compliant ETFs, focusing on global real estate and the S&P 500. This structure provides exposure to both real estate and a broad range of industries. Compared to typical balanced portfolios, it lacks diversification in terms of asset class variety. While this composition aligns with specific ethical investment goals, it may not capture the full benefits of diversification. Consider adding other asset classes, like bonds, to enhance stability and reduce volatility, especially during market downturns.

Growth Info

Historically, the portfolio has achieved a Compound Annual Growth Rate (CAGR) of 11.02%, which is commendable for a balanced portfolio. However, it also experienced a significant maximum drawdown of -31.58%. This indicates susceptibility to market volatility. The portfolio's performance has been concentrated, with just 13 days accounting for 90% of returns. Such concentration suggests potential for high volatility. Diversifying further could help mitigate this risk and stabilize returns over time.

Projection Info

Using Monte Carlo simulations, the portfolio's future performance shows a median growth projection of 274.36%. Monte Carlo analysis uses historical data to simulate many potential future outcomes, helping estimate risk and return. While 975 out of 1,000 simulations resulted in positive returns, it's crucial to remember that past performance doesn't guarantee future results. Given the high variability in potential outcomes, consider strategies to manage risk, such as increasing diversification or adjusting asset allocation to better align with your risk tolerance.

Asset classes Info

  • Real Estate
    50%
  • Stocks
    50%

The portfolio is heavily weighted towards real estate (50%) and stocks (49.92%), with negligible cash holdings. This allocation provides some diversification but lacks the stability typically offered by fixed-income assets like bonds. Real estate can offer steady income and inflation protection, while stocks provide growth potential. However, the absence of bonds may increase volatility during market downturns. Introducing bonds or other asset classes could enhance the portfolio's resilience, offering a more balanced risk-return profile.

Sectors Info

  • Real Estate
    50%
  • Technology
    24%
  • Consumer Discretionary
    7%
  • Health Care
    6%
  • Telecommunications
    5%
  • Industrials
    3%
  • Consumer Staples
    2%
  • Energy
    1%
  • Basic Materials
    1%

The sector allocation is heavily dominated by real estate (50.46%) and technology (23.92%). While this provides exposure to growth sectors, it may also increase vulnerability to sector-specific risks, such as real estate market fluctuations or tech industry volatility. Diversifying across more sectors could reduce this risk and improve stability. Consider increasing exposure to underrepresented sectors, like consumer defensive or utilities, to balance growth potential with defensive characteristics.

Regions Info

  • North America
    91%
  • Australasia
    8%
  • Asia Emerging
    1%

The portfolio is predominantly invested in North America (91.20%), with minimal exposure to other regions. This concentration may limit diversification benefits and increase vulnerability to regional economic downturns. Expanding geographic exposure can help mitigate region-specific risks and capture growth opportunities in emerging markets. Consider diversifying into regions like Asia or Europe to enhance global diversification and potentially improve long-term 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.

The portfolio can be optimized for a better risk-return ratio using the Efficient Frontier, which identifies the most efficient asset allocation for a given risk level. The current portfolio could achieve a higher expected return of 16.50% at the same risk level. However, this optimization involves changes in allocation and may not align with ethical investment criteria. Balancing optimization with investment goals is crucial. Consider consulting with a financial advisor to explore optimization strategies that align with your risk tolerance and objectives.

Dividends Info

  • SP Funds S&P Global REIT Sharia ETF 3.70%
  • SP Funds S&P 500 Sharia Industry Exclusions ETF 0.70%
  • Weighted yield (per year) 2.20%

The portfolio's overall dividend yield is 2.2%, with the real estate ETF contributing significantly at 3.7%. Dividends can provide a steady income stream, especially in volatile markets. However, the focus on real estate for dividends may increase exposure to sector-specific risks. Balancing dividend sources across various sectors could enhance income stability. Consider seeking additional dividend-paying stocks or ETFs to diversify income sources and reduce reliance on the real estate sector.

Ongoing product costs Info

  • SP Funds S&P Global REIT Sharia ETF 0.55%
  • SP Funds S&P 500 Sharia Industry Exclusions ETF 0.45%
  • Weighted costs total (per year) 0.50%

The total expense ratio (TER) of 0.5% is reasonable, supporting long-term returns. Lower costs mean more of your money stays invested, compounding over time. While the TER aligns with industry averages, exploring lower-cost alternatives could further enhance performance. Consider evaluating if there are comparable ETFs with lower fees that meet your investment criteria. Reducing costs can have a significant impact on net returns, especially over the long term.

What next?

Ready to invest in this portfolio?

Select a broker that fits your needs and watch for low fees to maximize your returns.

Select broker

Create your own report?

Analyze your portfolio

Join our community!

Join Discord

The information provided on this platform is for informational purposes only and should not be considered as financial or investment advice. Insightfolio does not provide investment advice, personalized recommendations, or guidance regarding the purchase, holding, or sale of financial assets. The tools and content are intended for educational purposes only and are not tailored to individual circumstances, financial needs, or objectives.

Insightfolio assumes no liability for the accuracy, completeness, or reliability of the information presented. Users are solely responsible for verifying the information and making independent decisions based on their own research and careful consideration. Use of the platform should not replace consultation with qualified financial professionals.

Investments involve risks. Users should be aware that the value of investments may fluctuate and that past performance is not an indicator of future results. Investment decisions should be based on personal financial goals, risk tolerance, and independent evaluation of relevant information.

Insightfolio does not endorse or guarantee the suitability of any particular financial product, security, or strategy. Any projections, forecasts, or hypothetical scenarios presented on the platform are for illustrative purposes only and are not guarantees of future outcomes.

By accessing the services, information, or content offered by Insightfolio, users acknowledge and agree to these terms of the disclaimer. If you do not agree to these terms, please do not use our platform.

Instrument logos provided by Elbstream.

Help us improve Insightfolio

Your feedback makes a difference! Share your thoughts in our quick survey. Take the survey