A growth-focused portfolio with strong US bias and limited sector diversity

Report created on Jan 12, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

This portfolio is heavily weighted towards equities, with a significant 72.73% allocation to the Vanguard S&P 500 UCITS Acc. The iShares NASDAQ 100 UCITS ETF and SPDR Russell 2000 US Small Cap UCITS ETF further emphasize a focus on US stocks. This composition aligns with a growth-oriented strategy but lacks diversification, as it heavily relies on the US market. While investing in well-established indices can provide stability, diversifying into other regions or asset classes could reduce risk and improve resilience against market volatility. Consider exploring additional asset types, such as bonds or international equities, to create a more balanced portfolio.

Growth Info

Historically, this portfolio has delivered a strong Compound Annual Growth Rate (CAGR) of 15.93%, outperforming many standard benchmarks. Such impressive performance is indicative of the robust growth potential of US equities, especially technology and large-cap stocks. However, it's essential to remember that past performance does not guarantee future results. The portfolio's maximum drawdown of -31.8% highlights its susceptibility to market downturns. To mitigate this risk, consider implementing strategies that balance growth with stability, such as incorporating defensive sectors or diversifying geographically.

Projection Info

Monte Carlo simulations provide a range of potential future outcomes by using historical data to model various scenarios. For this portfolio, simulations show a median return of 523.93%, with a high probability of positive returns. While this suggests a promising outlook, it's crucial to note that Monte Carlo projections are not predictions and carry inherent uncertainties. They rely on past data, which may not account for future market shifts. To prepare for different market conditions, consider maintaining flexibility in your investment strategy and regularly reviewing your portfolio's alignment with your financial goals.

Asset classes Info

  • Stocks
    100%

The portfolio's allocation is overwhelmingly skewed towards stocks, with a minuscule presence of other asset classes like cash and bonds. This heavy equity focus aligns with a high-risk, high-reward growth strategy but may leave the portfolio vulnerable to market volatility. Diversifying across different asset classes can help mitigate risks and stabilize returns. Incorporating bonds or alternative investments, such as real estate or commodities, could provide a buffer during market downturns and enhance the portfolio's resilience.

Sectors Info

  • Technology
    35%
  • Financials
    11%
  • Consumer Discretionary
    11%
  • Health Care
    10%
  • Telecommunications
    9%
  • Industrials
    8%
  • Consumer Staples
    5%
  • Energy
    3%
  • Utilities
    2%
  • Real Estate
    2%
  • Basic Materials
    2%

The portfolio exhibits a strong concentration in the technology sector, which accounts for 34.71% of the allocation. While this sector has historically driven significant growth, it can also be subject to higher volatility, particularly during interest rate hikes or regulatory changes. Other sectors, such as financial services and consumer cyclicals, provide some balance, but their weights are relatively low. To reduce sector-specific risks, consider increasing exposure to more stable sectors, such as healthcare or utilities, which may offer steadier returns during economic downturns.

Regions Info

  • North America
    99%
  • Europe Developed
    1%

With a staggering 98.70% allocation to North America, this portfolio is heavily concentrated in a single geographic region. While the US market has been a strong performer, this lack of geographic diversification can expose the portfolio to regional economic and political risks. Expanding exposure to other regions, such as Europe or Asia, could enhance diversification and capture growth opportunities in emerging markets. By balancing geographic allocations, you can reduce the impact of localized events and create a more resilient portfolio.

Redundant positions Info

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

The portfolio includes highly correlated assets, particularly between the iShares Core MSCI World UCITS ETF and the Vanguard S&P 500 UCITS Acc. High correlation means these assets tend to move in the same direction, which can limit diversification benefits. During market downturns, this could result in amplified losses. To enhance diversification, consider reducing exposure to overlapping assets and adding investments that have historically shown low correlation with US equities, such as international stocks or bonds. This can help smooth out returns and reduce overall portfolio risk.

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's current allocation may not be fully optimized along the Efficient Frontier, which represents the best possible risk-return trade-off. By adjusting the weights of existing assets, you can potentially achieve a more efficient portfolio. However, it's important to note that optimization focuses on current assets and does not inherently improve diversification. To enhance both efficiency and diversification, consider adding non-correlated assets. This dual approach can help achieve a better balance between risk and return, aligning with your growth objectives.

Ongoing product costs Info

  • iShares NASDAQ 100 UCITS ETF USD (Acc) 0.36%
  • iShares Core MSCI World UCITS ETF USD (Acc) 0.20%
  • SPDR® Russell 2000 US Small Cap UCITS ETF 0.30%
  • Vanguard S&P 500 UCITS Acc 0.07%
  • Weighted costs total (per year) 0.14%

The portfolio's total expense ratio (TER) is a low 0.14%, which is commendable and supports better long-term performance by minimizing costs. Low fees mean more of your investment returns stay in your pocket, enhancing compounding effects over time. While the cost structure is already efficient, it's still vital to periodically review the fees associated with each ETF. Ensure they remain competitive and consider lower-cost alternatives if available, as this can further optimize your portfolio's net returns.

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