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A balanced portfolio with global equity focus and low-cost bond exposure

Report created on Dec 27, 2024

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 consists of two primary components: 90% in the Vanguard FTSE All-World UCITS ETF and 10% in the Vanguard Eurozone Government Bond UCITS ETF. This composition leans heavily towards equities, indicating a growth-focused strategy while maintaining some bond exposure for stability. Compared to typical balanced portfolios, which often have a more even split between stocks and bonds, this portfolio is more aggressive. To align with a balanced risk profile, consider gradually increasing bond exposure to mitigate potential equity volatility.

Growth Info

Historically, the portfolio has performed well, with a Compound Annual Growth Rate (CAGR) of 11.34%. This impressive growth outpaces many traditional benchmarks, reflecting the strong performance of global equities. However, it's important to note the maximum drawdown of -30.66%, which indicates significant potential downside risk. While past performance is encouraging, it doesn't guarantee future results. To manage risk, consider maintaining a diversified approach and regularly reviewing asset allocation to ensure alignment with risk tolerance.

Projection Info

Using Monte Carlo simulations, which project future outcomes based on historical data, the portfolio shows a median (50th percentile) outcome of a 99.75% increase. While the 5th percentile projects a potential loss of -7.8%, the 67th percentile suggests a 140.75% gain. These projections highlight the range of potential outcomes, emphasizing the unpredictability of future market conditions. Remember, simulations are based on historical data and assumptions, which may not fully capture future market dynamics. Regular portfolio reviews and adjustments remain crucial.

Asset classes Info

  • Stocks
    90%
  • Bonds
    10%

The portfolio's asset allocation is 90% stocks and 10% bonds, with negligible exposure to other asset classes. This allocation is highly concentrated in equities, providing potential for strong growth but also increased volatility. Compared to typical balanced portfolios, which might have a more even distribution across asset classes, this allocation is more aggressive. To enhance diversification and potentially reduce volatility, consider incorporating additional asset classes such as real estate or commodities.

Sectors Info

  • Technology
    23%
  • Financials
    15%
  • Health Care
    9%
  • Consumer Discretionary
    9%
  • Industrials
    9%
  • Telecommunications
    7%
  • Consumer Staples
    5%
  • Energy
    4%
  • Basic Materials
    3%
  • Utilities
    3%
  • Real Estate
    2%

Sector allocation shows a significant concentration in technology (23.09%) and financial services (14.80%), with other sectors like healthcare and consumer cyclicals also well-represented. This composition aligns with global market trends but may lead to higher volatility, particularly if interest rates rise or tech stocks underperform. Ensuring sector balance is key to managing risk. Consider diversifying further across sectors to mitigate potential downturns in specific industries and enhance overall portfolio stability.

Regions Info

  • North America
    59%
  • Europe Developed
    13%
  • Asia Emerging
    5%
  • Japan
    5%
  • Asia Developed
    4%
  • Australasia
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is heavily weighted towards North America (58.99%), with smaller allocations in Europe, Asia, and other regions. This concentration reflects the dominance of U.S. equities in global markets but may expose the portfolio to regional economic risks. Compared to global benchmarks, this allocation is typical but could benefit from increased exposure to emerging markets for additional growth potential. Diversifying geographically can help balance risks and capitalize on growth opportunities in different regions.

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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The portfolio's current asset allocation can be optimized using the Efficient Frontier, which identifies the best risk-return ratio. By adjusting the mix of stocks and bonds, the portfolio could achieve a more efficient balance, potentially enhancing returns for a given level of risk. Remember, optimization focuses on the current assets and their allocation, not necessarily diversification. Regularly reassessing the portfolio's efficiency can help ensure it aligns with financial objectives and risk tolerance.

Ongoing product costs Info

  • Vanguard Eurozone Government Bond UCITS 0.07%
  • Vanguard FTSE All-World UCITS ETF USD Accumulation 0.22%
  • Weighted costs total (per year) 0.20%

With a total expense ratio (TER) of 0.2%, the portfolio is cost-effective, supporting better long-term returns. Low costs are crucial in maximizing investment gains, as high fees can erode returns over time. Compared to industry averages, this TER is commendably low. To maintain cost efficiency, regularly review the portfolio for potential lower-cost alternatives that align with investment goals. Keeping expenses in check ensures more of your money works for you.

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