A balanced UK portfolio with strong North American focus and tech sector tilt

Report created on Feb 23, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio is composed of 90% equities and 10% in physical gold, with significant allocations to major ETFs like Vanguard S&P 500 and Invesco EQQQ NASDAQ-100. This composition aligns with a balanced risk profile, offering growth potential while maintaining some protection through gold. Comparing to benchmarks, the portfolio leans heavily towards equities, which may increase volatility. To enhance balance, consider diversifying into other asset classes such as bonds or real estate, which can reduce risk and improve stability during market downturns.

Growth Info

Historically, the portfolio has performed well, with a Compound Annual Growth Rate (CAGR) of 15.54%. This impressive growth exceeds typical market benchmarks, indicating strong past performance. However, the maximum drawdown of -20.47% highlights potential vulnerability during market corrections. While past performance is not indicative of future results, it suggests the portfolio has been resilient in capturing market upswings. To mitigate future drawdowns, consider incorporating assets with lower correlations to equities, which can provide a buffer during downturns.

Projection Info

Using Monte Carlo simulations, the portfolio's future performance shows robust potential, with a 50th percentile outcome of 610.6% growth. These simulations project potential outcomes based on historical data, offering a range of possibilities. The high number of positive simulations (997 out of 1,000) suggests strong future prospects, but it's important to remember that these are estimates, not guarantees. To enhance confidence in future performance, regularly review and adjust the portfolio in response to changing market conditions and personal financial goals.

Asset classes Info

  • Stocks
    90%
  • Other
    10%

The portfolio's heavy allocation to equities (90%) and a small allocation to gold (10%) provides limited diversification. While equities offer growth potential, the lack of exposure to other asset classes like bonds or real estate could increase risk during market volatility. Comparing to benchmarks, this allocation is more aggressive. To improve diversification, consider adding fixed-income securities or other alternative investments, which can provide stability and reduce overall portfolio risk.

Sectors Info

  • Technology
    32%
  • Consumer Discretionary
    11%
  • Telecommunications
    10%
  • Financials
    10%
  • Health Care
    8%
  • Industrials
    6%
  • Consumer Staples
    5%
  • Energy
    2%
  • Utilities
    2%
  • Basic Materials
    2%
  • Real Estate
    1%

With a 32% allocation to technology, the portfolio is significantly tech-heavy, which can lead to higher volatility, especially during interest rate changes. Other sectors, like consumer cyclicals and financial services, are represented but to a lesser extent. This concentration can amplify returns during tech booms but also increase risk if the sector underperforms. To mitigate this, consider a more balanced sector allocation by increasing exposure to sectors like healthcare or utilities, which can provide more stability.

Regions Info

  • North America
    79%
  • Europe Developed
    5%
  • Asia Emerging
    2%
  • Japan
    2%
  • Asia Developed
    1%
  • Australasia
    1%

The portfolio's geographic exposure is predominantly North American (79%), with minimal allocations to Europe and Asia. This concentration can lead to regional risk, particularly if North American markets face downturns. While North America has been a strong performer, greater geographic diversification can reduce potential risks and capture growth opportunities in emerging markets. Consider increasing exposure to underrepresented regions like Europe and Asia to enhance global diversification and resilience against regional economic shifts.

Market capitalization Info

  • Mega-cap
    44%
  • Large-cap
    32%
  • Mid-cap
    14%
  • No data
    10%

The portfolio's allocation favors mega-cap (44%) and big-cap (32%) stocks, with little exposure to small or micro-cap companies. While large-cap stocks offer stability and lower risk, they may limit growth potential compared to smaller companies. This allocation aligns with a conservative risk approach but may miss out on the higher returns smaller companies can provide. To balance growth and stability, consider adding small or mid-cap stocks, which can enhance diversification and capture growth opportunities in different market environments.

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 using the Efficient Frontier, which suggests a more efficient allocation with a slightly higher expected return of 16.68% at the same risk level. The Efficient Frontier represents the best possible risk-return ratio for a given set of assets. This optimization doesn't necessarily mean adding new assets but reallocating existing ones for better efficiency. Regularly review and adjust the portfolio to maintain optimal risk-return balance, ensuring alignment with your financial goals.

Ongoing product costs Info

  • Invesco EQQQ NASDAQ-100 UCITS ETF 0.35%
  • iShares Physical Gold ETC 0.25%
  • Vanguard S&P 500 UCITS Acc 0.07%
  • Vanguard FTSE All-World UCITS ETF USD Accumulation 0.22%
  • Weighted costs total (per year) 0.20%

The portfolio's total expense ratio (TER) is 0.20%, which is relatively low and advantageous for long-term performance. Lower costs mean more of your returns stay in your pocket, compounding over time. This cost efficiency is a positive aspect of the portfolio. However, it's essential to regularly review fees, as they can change. Consider exploring even lower-cost options or negotiating fees if possible, as every percentage saved can significantly impact long-term returns.

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