A cautious portfolio with strong North American focus and moderate diversification

Report created on Feb 9, 2025

Risk profile Info

3/7
Cautious
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio consists of 55% Vanguard S&P 500, 30% iShares Core MSCI World, 10% Vanguard Eurozone Government Bonds, and 5% iShares Physical Gold. This mix leans heavily towards equities with a small allocation to bonds and gold. Compared to a typical balanced portfolio, this setup is equity-heavy, potentially increasing risk. Consider balancing equities with more bonds or alternative assets for greater stability, aligning with a cautious risk profile.

Growth Info

Historically, the portfolio has shown a strong CAGR of 12.64%, indicating robust growth over time. However, the maximum drawdown of -15.54% highlights potential volatility. Compared to benchmarks, this performance is commendable for a cautious profile. To maintain this growth, consider periodic reviews to ensure alignment with changing market conditions and personal goals, while being mindful of potential downturns.

Projection Info

The Monte Carlo simulation, which uses historical data to forecast future outcomes, shows a median return of 298.5% with 997 out of 1,000 simulations yielding positive results. While promising, it's important to remember that these projections are not guarantees. Regularly review asset allocation to adapt to market changes, and consider diversifying further to hedge against unexpected market shifts.

Asset classes Info

  • Stocks
    85%
  • Bonds
    10%
  • Other
    5%

With 85% in stocks, 10% in bonds, and 5% in gold, the portfolio is predominantly equity-focused. This allocation suggests potential for higher returns but also higher risk, especially during market downturns. Compared to benchmarks, the bond allocation is lower, which might not align with a cautious profile. Increasing bond exposure could enhance stability and provide consistent income, balancing the equity risk.

Sectors Info

  • Technology
    27%
  • Financials
    12%
  • Consumer Discretionary
    10%
  • Health Care
    9%
  • Telecommunications
    8%
  • Industrials
    7%
  • Consumer Staples
    5%
  • Energy
    3%
  • Utilities
    2%
  • Basic Materials
    2%
  • Real Estate
    2%

The portfolio is tech-heavy, with 27% in technology, followed by financial services and consumer cyclicals. This concentration can lead to higher volatility, especially if tech sectors face challenges like regulatory changes or interest rate hikes. Balancing sector exposure by increasing allocations in defensive sectors could mitigate risk and enhance the portfolio's resilience against sector-specific downturns.

Regions Info

  • North America
    78%
  • Europe Developed
    5%
  • Japan
    2%
  • Australasia
    1%

The portfolio has a significant North American exposure at 78%, with limited diversification across other regions. This concentration may lead to vulnerability if the U.S. market experiences downturns. To enhance geographic diversification, consider increasing exposure to Europe, Asia, or emerging markets, which can provide a hedge against regional economic fluctuations and capture growth opportunities.

Market capitalization Info

  • Mega-cap
    40%
  • Large-cap
    29%
  • Mid-cap
    15%

The portfolio is predominantly invested in mega and big-cap stocks, totaling 69%. While these companies often offer stability, this may limit growth potential compared to smaller caps. Introducing a modest allocation to small and mid-cap stocks could enhance diversification and capture potential high-growth opportunities, aligning with long-term investment goals while managing risk.

Redundant positions Info

  • Vanguard S&P 500 UCITS Acc
    iShares Core MSCI World UCITS ETF USD (Acc)
    High correlation

The assets in this portfolio, particularly the Vanguard S&P 500 and iShares Core MSCI World, show high correlation, which may limit diversification benefits. During market downturns, correlated assets tend to move together, increasing risk. Consider diversifying with less correlated assets, such as bonds or alternative investments, to improve risk management and enhance portfolio resilience.

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 along the Efficient Frontier by adjusting the current asset allocation to enhance the risk-return ratio. This involves reallocating between the existing assets to achieve the best possible returns for the given risk level. Consider consulting with a financial advisor to explore optimization strategies tailored to your specific risk tolerance and investment goals.

Ongoing product costs Info

  • iShares Core MSCI World UCITS ETF USD (Acc) 0.20%
  • Vanguard EUR Eurozone Government Bond UCITS ETF EUR Accumulation 0.07%
  • Vanguard S&P 500 UCITS Acc 0.07%
  • Weighted costs total (per year) 0.11%

The portfolio's total expense ratio (TER) is 0.11%, which is impressively low. This cost efficiency supports better long-term performance by minimizing the drag on returns. Continue to monitor and manage costs, as even small fee reductions can significantly impact long-term growth. Consider regularly reviewing fund expenses to ensure they remain competitive and aligned with investment objectives.

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