A balanced ETF portfolio with a strong focus on global equity and technology sectors

Report created on Jan 23, 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 composed entirely of equity ETFs, with a significant allocation to broad market indices and thematic sectors. The Vanguard FTSE All-World UCITS ETF takes up 40%, providing extensive global diversification. The Invesco EQQQ NASDAQ-100 ETF, at 25%, introduces a tech-heavy component. The JPM Global Equity Multi-Factor ETF at 20% adds a factor-based approach, while the Xtrackers MSCI World Health Care ETF at 15% offers sector-specific exposure. This composition aligns well with a balanced risk profile, though it might benefit from incorporating asset classes like bonds for further risk mitigation.

Growth Info

Historically, the portfolio has delivered a robust CAGR of 13.76%, indicating strong growth relative to many benchmarks. However, the max drawdown of -31.59% suggests significant volatility, typical of equity-heavy portfolios. This performance highlights the importance of understanding market cycles and maintaining a long-term perspective. While past performance is not predictive of future results, this historical data suggests potential for substantial growth with inherent risks. Investors should consider whether such volatility aligns with their risk tolerance and investment goals.

Projection Info

Using Monte Carlo simulations, this portfolio projects a wide range of potential outcomes. The 5th percentile indicates a modest growth to 105.5%, while the median suggests a substantial increase to 444.6%. This illustrates the unpredictability of future returns, as simulations rely on historical data, which cannot guarantee future performance. The high number of simulations with positive returns is encouraging, but investors should remain cautious and prepared for different scenarios. Diversification and periodic reviews can help manage expectations and align with changing market conditions.

Asset classes Info

  • Stocks
    100%

The portfolio is entirely invested in stocks, which can offer high returns but also come with increased risk compared to more diversified portfolios that include bonds or other asset classes. This allocation may lead to higher volatility, especially during market downturns. Including other asset classes could enhance stability and reduce risk. For those comfortable with the current setup, maintaining a long-term strategy and focusing on periodic rebalancing could help manage risk while capitalizing on equity growth potential.

Sectors Info

  • Technology
    26%
  • Health Care
    23%
  • Consumer Discretionary
    10%
  • Financials
    9%
  • Telecommunications
    8%
  • Industrials
    7%
  • Consumer Staples
    6%
  • Utilities
    3%
  • Energy
    3%
  • Basic Materials
    3%
  • Real Estate
    3%

With a significant 26% in technology and 23% in healthcare, the portfolio is heavily weighted towards these sectors. This concentration can lead to higher volatility, especially if these sectors face downturns. While technology has been a strong performer recently, its cyclical nature could impact returns during economic shifts. Balancing sector exposure by considering additional sectors or reducing concentration in tech and healthcare could enhance stability. This approach may help mitigate sector-specific risks and provide a more balanced growth trajectory.

Regions Info

  • North America
    77%
  • Europe Developed
    12%
  • Japan
    4%
  • Asia Emerging
    2%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    1%

The geographic allocation is heavily tilted towards North America, representing 77% of the portfolio. While this reflects the dominance of U.S. markets, it may limit exposure to growth opportunities in other regions. Diversifying geographically could reduce potential risks associated with regional economic downturns and political instability. Investors might consider increasing allocations to Europe, Asia, and emerging markets to capture global growth trends and achieve a more balanced geographic exposure.

Market capitalization Info

  • Mega-cap
    40%
  • Large-cap
    39%
  • Mid-cap
    21%

The portfolio's market capitalization is skewed towards mega and big-cap stocks, comprising 79% of holdings. This focus provides stability and lower risk compared to small-cap stocks, which are more volatile. However, it may limit exposure to higher growth potential found in smaller companies. Diversifying across different market capitalizations could enhance growth prospects while maintaining a balanced risk profile. Investors should consider their comfort with market cap exposure and potential adjustments to align with their investment strategy.

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 appears well-positioned on the Efficient Frontier, suggesting a favorable risk-return balance given its current asset allocation. However, there's always room for optimization by adjusting weights among existing holdings. The goal is to achieve the best possible risk-return ratio, not necessarily diversification. Investors should periodically reassess their allocations to ensure alignment with their evolving risk tolerance and financial goals. This proactive approach can help maintain efficiency and optimize returns over time.

Ongoing product costs Info

  • Invesco EQQQ NASDAQ-100 UCITS ETF (EUR Hdg) 0.35%
  • JPM Global Equity Multi-Factor UCITS ETF USD Acc 0.19%
  • Vanguard FTSE All-World UCITS ETF USD Accumulation 0.22%
  • Xtrackers MSCI World Health Care UCITS ETF 1C 0.25%
  • Weighted costs total (per year) 0.25%

With a total expense ratio of 0.25%, the portfolio's costs are relatively low, supporting better long-term performance by minimizing drag on returns. Keeping expenses in check is crucial, as high fees can erode gains over time. This competitive cost structure aligns well with the goal of maximizing returns while maintaining a balanced risk profile. Investors should regularly review fee structures to ensure they remain competitive and consider cost-efficient alternatives if necessary to enhance net returns.

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