A balanced global portfolio with strong growth potential and moderate risk exposure

Report created on Mar 5, 2025

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 heavily weighted towards equities, with 85% allocated to the Vanguard FTSE All-World UCITS ETF and 15% to the iShares MSCI World Small Cap UCITS ETF. This composition indicates a strong focus on global equity markets, providing broad diversification across multiple sectors and regions. Compared to a typical balanced portfolio, which might include bonds or other asset classes, this portfolio is entirely equity-focused. This can lead to higher growth potential, but also increased volatility. To align with a balanced risk profile, consider incorporating other asset classes like bonds to smooth out potential market fluctuations.

Growth Info

The portfolio's historic performance shows a CAGR of 11.68%, which is impressive and suggests strong growth over time. The maximum drawdown of -34.41% indicates significant exposure to market volatility, typical for an equity-heavy portfolio. Compared to benchmarks, this performance aligns well with global equity indices, demonstrating effective diversification and sector allocation. However, past performance is not a guarantee of future results. It's essential to regularly review and adjust the portfolio to maintain alignment with personal risk tolerance and investment goals.

Projection Info

Monte Carlo simulations, which use historical data to project future outcomes, suggest a wide range of potential returns for this portfolio. With 1,000 simulations, the median (50th percentile) outcome projects a return of 272%, while the 5th percentile indicates a return of 14.7%. This demonstrates the inherent uncertainty in forecasting returns, emphasizing the need for a long-term investment horizon. While simulations provide useful insights, they are based on historical data and assumptions, so actual future performance may differ. Diversifying further could help mitigate risks and enhance potential returns.

Asset classes Info

  • Stocks
    100%

With 100% allocation to stocks, this portfolio lacks exposure to other asset classes like bonds or real estate, which are typically included for diversification. This concentration in equities can increase the potential for higher returns but also exposes the portfolio to greater volatility. Compared to a balanced benchmark that includes multiple asset classes, this portfolio may experience more significant fluctuations. Consider introducing other asset classes to reduce risk and improve stability, especially if market conditions become unfavorable for equities.

Sectors Info

  • Technology
    24%
  • Financials
    17%
  • Consumer Discretionary
    12%
  • Industrials
    11%
  • Health Care
    10%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    4%
  • Real Estate
    3%
  • Utilities
    3%

The portfolio is well-diversified across sectors, with notable allocations in technology (24%), financial services (17%), and consumer cyclicals (12%). This sector distribution aligns closely with global benchmarks, providing a balanced exposure to various economic cycles. However, the high concentration in technology may lead to increased volatility, especially during interest rate changes or tech sector disruptions. Maintaining this sector balance is beneficial, but periodically reviewing sector allocations can help ensure they continue to align with market trends and personal investment goals.

Regions Info

  • North America
    67%
  • Europe Developed
    14%
  • Japan
    7%
  • Asia Emerging
    5%
  • Asia Developed
    3%
  • Australasia
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio has a strong North American focus, with 67% exposure, followed by Europe Developed (14%) and Japan (7%). This allocation is typical for global equity portfolios, reflecting the dominance of these regions in global markets. However, it underrepresents emerging markets, which could offer higher growth potential. Increasing exposure to regions like Asia Emerging or Latin America could enhance diversification and capture growth opportunities. Balancing geographic exposure can help mitigate risks associated with regional economic downturns.

Market capitalization Info

  • Mega-cap
    40%
  • Large-cap
    30%
  • Mid-cap
    20%
  • Small-cap
    8%
  • Micro-cap
    2%

The portfolio's market capitalization is diverse, with 40% in mega-cap, 30% in big-cap, 20% in medium-cap, and smaller allocations to small and micro-cap stocks. This distribution provides a good mix of stability from larger companies and growth potential from smaller ones. Compared to market benchmarks, this allocation is well-balanced, offering both stability and growth. However, the lower allocation to small and micro-cap stocks may limit upside potential. Adjusting the balance between market caps could further optimize risk and return.

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 for a better risk-return balance using the Efficient Frontier, a concept that identifies the best possible return for a given risk level. The current portfolio's expected return is slightly below the optimal level, suggesting room for improvement. By adjusting allocations among existing assets, you could achieve a more efficient portfolio with the same risk level. This optimization process relies on historical data and assumptions, so ongoing review and adjustment are important to maintain alignment with investment goals.

Ongoing product costs Info

  • iShares MSCI World Small Cap UCITS ETF USD (Acc) 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 competitive and supports long-term performance by minimizing costs. Lower costs mean more of your investment returns stay in your pocket, compounding over time. Compared to industry averages, this TER is favorable, indicating efficient fund selection. While costs are already low, periodically reviewing fund expenses can help ensure they remain competitive. Consider reallocating to lower-cost options if available, further enhancing net returns.

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