Portfolio Balances Growth and Diversification with Moderate Risk and Overlapping Asset Classes

Report created on Dec 2, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

This portfolio is composed of five different ETFs, making it moderately diversified. The largest position is the EasyETF - BNP Paribas Easy S&P 500 UCITS ETF, which accounts for 40% of the portfolio. Other significant holdings include the Lyxor UCITS NASDAQ-100 Daily Leverage and Amundi Stoxx Europe 600 UCITS ETF C, each making up 20%. The remaining 20% is split between the Amundi MSCI World UCITS ETF and Lyxor PEA Inde (MSCI India) UCITS ETF. The portfolio leans heavily towards equity investments, reflecting a growth-focused strategy.

Growth Info

Historically, this portfolio has shown impressive performance with a CAGR of 20.24%. However, it has also experienced significant volatility, as indicated by a max drawdown of -41.7%. This high return potential comes with increased risk, which is typical for growth-oriented portfolios. The performance is driven by concentrated exposure to major indices like the S&P 500 and NASDAQ-100. While the returns are attractive, the volatility suggests a need for a strong risk management strategy to weather downturns.

Projection Info

Using a Monte Carlo simulation with 1,000 iterations, the portfolio shows a wide range of potential outcomes. Assuming a hypothetical initial investment, the 5th percentile projection indicates a return of 98.83%, while the 50th and 67th percentiles suggest returns of 916.53% and 1,465.03%, respectively. The annualized return across all simulations is 21.28%. This method highlights the portfolio's potential for substantial growth but also underscores the inherent uncertainty and risk associated with such an aggressive strategy.

Asset classes Info

  • Stocks
    80%
  • Other
    20%

The portfolio's asset classes are predominantly stocks, accounting for nearly 80% of the allocation. The remaining 20% falls into the 'Other' category. This heavy equity focus aligns with a growth strategy, aiming for capital appreciation over time. While equities offer higher returns, they also carry more risk compared to fixed income or other asset classes. To balance risk, consider diversifying into other asset classes like bonds, which can provide stability and income, especially during market downturns.

Sectors Info

  • Technology
    19%
  • Financials
    13%
  • Health Care
    9%
  • Industrials
    9%
  • Consumer Discretionary
    8%
  • Telecommunications
    6%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    3%
  • Utilities
    3%
  • Real Estate
    2%

Sector allocation in the portfolio is diverse, with a significant focus on Technology, Financial Services, and Healthcare, which together make up a large portion of the portfolio. This sector concentration can drive growth but also increases exposure to sector-specific risks. The portfolio could benefit from a more balanced sector allocation to reduce volatility and enhance diversification. Consider spreading investments across underrepresented sectors to mitigate sector-specific downturns and improve overall stability.

Regions Info

  • North America
    47%
  • Europe Developed
    22%
  • Asia Emerging
    10%
  • Japan
    1%

Geographically, the portfolio is heavily weighted towards North America, which constitutes nearly half of the allocation. Europe Developed and Asia Emerging make up significant portions as well. This geographic distribution reflects a focus on developed markets with some exposure to emerging markets. While this provides a solid foundation, the portfolio could benefit from more geographic diversification. Incorporating other regions could help reduce geographic risk and tap into growth opportunities in less represented areas.

Redundant positions Info

  • Amundi Index Solutions - Amundi MSCI World UCITS ETF C EUR
    EasyETF - BNP Paribas Easy S&P 500 UCITS ETF
    High correlation

The portfolio contains highly correlated assets, particularly between the Amundi MSCI World UCITS ETF and the EasyETF - BNP Paribas Easy S&P 500 UCITS ETF. High correlation between assets can reduce the diversification benefits and increase risk exposure. To enhance diversification, consider reducing positions in overlapping assets and introducing investments with lower correlation to existing holdings. This can help stabilize the portfolio during market fluctuations and improve risk-adjusted 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.

Before considering optimization, addressing the overlapping highly correlated assets is essential. By reducing these overlaps, the portfolio can achieve better diversification and potentially lower risk. Once this is addressed, investors can optimize their portfolio by adjusting allocations along the efficient frontier. Moving towards riskier assets can increase potential returns, while shifting towards more conservative investments can help stabilize returns. This approach allows for aligning the portfolio with personal risk tolerance and financial goals.

Ongoing product costs Info

  • Amundi Index Solutions - Amundi MSCI World UCITS ETF C EUR 0.38%
  • EasyETF - BNP Paribas Easy S&P 500 UCITS ETF 0.12%
  • Lyxor UCITS NASDAQ-100 Daily Leverage 0.60%
  • Amundi Stoxx Europe 600 UCITS ETF C 0.07%
  • Lyxor PEA Inde (MSCI India) UCITS ETF Capi 0.85%
  • Weighted costs total (per year) 0.30%

The portfolio's total expense ratio (TER) is relatively low at 0.3%, which is advantageous for long-term growth as it minimizes the drag on returns. However, some individual positions like the Lyxor UCITS NASDAQ-100 Daily Leverage and Lyxor PEA Inde (MSCI India) UCITS ETF have higher fees. Keeping costs low is crucial, especially in volatile markets, as it preserves more of the investment returns. Consider reviewing the cost structure and potentially replacing high-fee ETFs with more cost-effective alternatives.

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