A balanced portfolio with global equity focus and moderate bond exposure for stability

Report created on Jan 28, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

This portfolio is composed of 80% equities and 15% bonds, with a minor 5% allocation to another equity ETF. The heavy weighting towards the iShares Core MSCI World ETF suggests a global equity focus, while the Vanguard Eurozone Government Bond ETF provides some stability. Compared to a typical balanced benchmark, this portfolio leans more towards equities. This composition is suitable for those seeking growth with some level of risk mitigation through bonds. To enhance diversification, consider adding other asset classes or regions that are currently underrepresented.

Growth Info

Historically, this portfolio has performed well, with a CAGR of 13.38%. A hypothetical €10,000 investment would have grown significantly over the years. However, it experienced a maximum drawdown of -29.16%, indicating vulnerability during market downturns. Compared to balanced benchmarks, the performance is strong, but the drawdown suggests a need for caution. Past performance is not a guarantee of future results, so it's crucial to maintain a balanced perspective and not rely solely on historical data when making future investment decisions.

Projection Info

The Monte Carlo simulation projects a wide range of potential outcomes, with a 50th percentile return of 247.8% and a 5th percentile of 36.5%. This demonstrates the portfolio's potential for growth, but also highlights the uncertainty in future performance. With 984 out of 1,000 simulations showing positive returns, the outlook is optimistic. However, it's important to remember that these projections rely on historical data, which may not perfectly predict future market conditions. Regularly reviewing and adjusting the portfolio in response to market changes can help manage this uncertainty.

Asset classes Info

  • Stocks
    85%
  • Bonds
    15%

The portfolio is primarily composed of equities (85%) and bonds (15%), with no allocation to cash or alternative assets. This allocation offers growth potential through equities while providing some stability with bonds. Compared to a typical balanced benchmark, the equity allocation is higher, which may increase volatility. To improve diversification, consider adding alternative asset classes like real estate or commodities, which can provide additional risk management benefits and potentially enhance returns during different market conditions.

Sectors Info

  • Technology
    23%
  • Financials
    13%
  • Consumer Discretionary
    9%
  • Health Care
    9%
  • Industrials
    8%
  • Telecommunications
    7%
  • Consumer Staples
    5%
  • Energy
    3%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    2%

The sector allocation shows a strong emphasis on technology (23%) and financial services (13%), with moderate exposure to consumer cyclicals, healthcare, and industrials. This sector composition is fairly diversified, aligning well with global benchmarks. However, the tech-heavy allocation may lead to higher volatility, especially during periods of interest rate changes. To mitigate this risk, consider balancing the portfolio by increasing exposure to more stable sectors like consumer defensives or utilities, which can provide a buffer during economic downturns.

Regions Info

  • North America
    67%
  • Europe Developed
    12%
  • Japan
    4%
  • Australasia
    1%
  • Asia Developed
    1%

The portfolio's geographic allocation is heavily tilted towards North America (67%), with smaller exposures to Europe (12%) and Japan (4%). This concentration in North America aligns with global equity benchmarks, but may expose the portfolio to regional risks. To enhance diversification, consider increasing exposure to underrepresented regions like emerging markets or other developed areas. This can help manage risk by spreading investments across different economic environments and potentially capturing growth opportunities in less developed markets.

Market capitalization Info

  • Mega-cap
    39%
  • Large-cap
    30%
  • Mid-cap
    15%

The portfolio's market capitalization distribution is dominated by mega-cap (39%) and large-cap (30%) stocks, with medium-cap stocks making up 15%. This focus on larger companies aligns with typical benchmarks and provides stability and less volatility. However, the absence of small-cap exposure may limit the portfolio's potential for higher growth, as smaller companies often offer greater upside potential. Introducing a small-cap allocation could enhance diversification and provide opportunities for capital appreciation.

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 focuses on achieving the best possible risk-return ratio with the current assets. By adjusting the allocation between the existing assets, the portfolio could potentially achieve higher returns for the same level of risk or reduce risk for the same level of return. However, this optimization is limited to the current asset choices, and adding new, uncorrelated assets could further enhance the portfolio's efficiency and diversification.

Ongoing product costs Info

  • iShares Core MSCI World UCITS ETF USD (Acc) 0.20%
  • SPDR S&P 500 UCITS ETF EUR Acc H 0.05%
  • Vanguard EUR Eurozone Government Bond UCITS ETF EUR Accumulation 0.07%
  • Weighted costs total (per year) 0.17%

The portfolio's total expense ratio (TER) is 0.17%, which is relatively low and beneficial for long-term performance. Lower costs mean more of your investment returns stay in your pocket, compounding over time. Compared to the average TER for similar portfolios, this is quite competitive. To maintain this advantage, regularly review the cost structure and consider low-cost alternatives if fees start to increase. Keeping expenses in check is crucial for maximizing long-term portfolio growth.

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