A balanced global ETF portfolio with strong North American and European exposure

Report created on Jan 10, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio is composed entirely of ETFs, with a significant allocation to North American equities at 32% and European equities at 21%. This structure aligns with a balanced investment approach, focusing on developed markets while maintaining a diversified exposure to various regions. The inclusion of emerging markets at 17% adds growth potential, although it comes with higher risk. A single asset class, stocks, dominates the portfolio, which is typical for an equity-focused strategy. It’s essential to periodically review asset allocations to ensure they align with your investment goals and risk tolerance.

Growth Info

Historically, the portfolio has delivered a Compound Annual Growth Rate (CAGR) of 10.01%, which is impressive for a balanced profile. The max drawdown of -31.32% highlights potential volatility, reflecting the inherent risks of equity investments. This performance indicates strong historical returns, but it's important to remember that past performance doesn't guarantee future results. Comparing these metrics to a benchmark can help assess relative performance. Regularly evaluating past performance can guide future investment decisions, ensuring alignment with financial objectives.

Projection Info

The Monte Carlo simulation, which uses historical data to project potential outcomes, suggests an annualized return of 8.59%. With 944 out of 1,000 simulations showing positive returns, the portfolio appears resilient under various market conditions. However, the 5th percentile shows a potential loss, reminding investors of inherent risks. While simulations provide insights, they are based on historical trends and assumptions, which might not hold in the future. Continually reassessing projections and adjusting strategies as needed can help manage expectations and align with long-term goals.

Asset classes Info

  • Stocks
    100%

The portfolio's allocation is heavily skewed towards equities, accounting for nearly 100% of the asset class distribution. While this concentration can drive growth, it also increases exposure to market volatility. Diversifying into other asset classes, such as bonds or real estate, could provide stability and reduce risk. Comparing this allocation to a benchmark can highlight potential areas for diversification. Balancing growth potential with risk management is crucial, and periodic reviews can ensure the portfolio remains aligned with your financial objectives.

Sectors Info

  • Technology
    17%
  • Consumer Staples
    16%
  • Financials
    16%
  • Health Care
    15%
  • Industrials
    10%
  • Consumer Discretionary
    9%
  • Telecommunications
    6%
  • Basic Materials
    4%
  • Energy
    3%
  • Utilities
    2%
  • Real Estate
    2%

Sector allocation is well-distributed, with technology, consumer defensive, and financial services each holding significant weights. This balance aligns with common benchmarks, indicating a diversified approach. However, a tech-heavy allocation may increase volatility during market fluctuations. Keeping an eye on sector trends and economic conditions can provide insights into potential risks and opportunities. Adjusting sector weights based on market outlooks and personal risk tolerance can enhance portfolio resilience and optimize returns.

Regions Info

  • North America
    44%
  • Europe Developed
    26%
  • Japan
    9%
  • Asia Emerging
    9%
  • Asia Developed
    6%
  • Australasia
    3%
  • Africa/Middle East
    2%
  • Latin America
    1%

Geographic exposure is primarily focused on North America and Europe, with emerging and developed Asia also represented. This allocation provides a balanced mix of stability from developed markets and growth potential from emerging regions. However, underrepresentation in regions like Latin America and Africa may limit diversification. Comparing geographic allocations to global benchmarks can identify potential gaps. Regularly reviewing geographic exposure ensures alignment with global economic trends and personal investment goals, potentially enhancing diversification and risk management.

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 to be well-optimized along the Efficient Frontier, balancing risk and return effectively. The Efficient Frontier represents the best possible risk-return ratio for a given set of assets. This optimization indicates that the current allocation is likely maximizing returns for the level of risk taken. However, periodic reviews are necessary to ensure continued alignment with changing market conditions and personal goals. Adjusting allocations to maintain efficiency can enhance long-term portfolio performance.

Dividends Info

  • iShares MSCI World Health Care Sector ESG UCITS ETF USD Inc 1.10%
  • Weighted yield (per year) 0.08%

With a total dividend yield of 0.08%, the portfolio's income generation is minimal, primarily due to its focus on growth-oriented ETFs. Dividends can provide a steady income stream and cushion against market volatility, which is beneficial for income-focused investors. Evaluating the role of dividends in your investment strategy can guide adjustments to meet income needs. Incorporating higher-yielding assets, if desired, could enhance income potential without compromising growth objectives.

Ongoing product costs Info

  • iShares MSCI World Health Care Sector ESG UCITS ETF USD Inc 0.18%
  • L&G Asia Pacific ex Japan Equity UCITS ETF 0.10%
  • Amundi Stoxx Europe 600 UCITS ETF C EUR 0.07%
  • Amundi Index Solutions - Amundi Prime Japan UCITS ETF DR (C) 0.05%
  • Vanguard FTSE North America UCITS ETF USD Accuimulation 0.10%
  • Xtrackers MSCI World Consumer Staples UCITS ETF 1C 0.25%
  • Xtrackers MSCI Emerging Markets UCITS ETF 1C 0.18%
  • Weighted costs total (per year) 0.13%

The total expense ratio (TER) of 0.13% is impressively low, supporting better long-term performance by minimizing costs. This cost efficiency aligns with best practices, as lower fees can significantly enhance net returns over time. Regularly reviewing and comparing costs to industry averages can ensure continued cost-effectiveness. Maintaining a focus on low-cost investments while achieving desired exposure and diversification is key to optimizing portfolio performance and achieving financial goals.

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