Balanced Diversified Portfolio with Global Exposure and Moderate Risk for Growth-Oriented Investors

Report created on Jul 4, 2024

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

Positions

The portfolio is composed of four ETFs, with a significant focus on global equities. It is well-diversified across various regions and sectors, emphasizing a balanced investment strategy. The iShares MSCI ACWI UCITS ETF holds the largest position, making up 40% of the portfolio, providing broad global exposure. The remaining investments are evenly distributed among European, high dividend yield, and emerging market ETFs. This composition suggests a strategy aimed at capturing global market growth while maintaining a balanced risk profile.

Growth Info

Historically, the portfolio has shown strong performance with a compound annual growth rate (CAGR) of 9.24%. This indicates robust growth over time, despite experiencing a maximum drawdown of -33.58%, reflecting periods of market volatility. The portfolio's performance is concentrated, with 90% of returns driven by just 20 days, highlighting the importance of staying invested during volatile periods. This historical performance suggests a resilient portfolio capable of delivering growth, though with some exposure to market downturns.

Projection Info

Using a Monte Carlo simulation with 1,000 iterations, the portfolio's future performance was analyzed, assuming a hypothetical initial investment. The simulation provides a range of potential outcomes, with the 50th percentile projecting a 193.96% return and the 67th percentile indicating a 290.5% return. The annualized return across all simulations is 9.22%, aligning closely with historical performance. This suggests a strong likelihood of continued growth, although individual results may vary. The Monte Carlo analysis helps in understanding the potential variability and expected returns of the portfolio.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted in stocks, comprising 99.7% of the total assets, with minor allocations in cash and other categories. This significant equity exposure aligns with a growth-oriented strategy, aiming for capital appreciation over time. While this allocation can yield higher returns, it also introduces greater volatility. Investors should consider their risk tolerance and investment horizon, as the current asset class distribution may not suit those seeking stability or income-focused investments.

Sectors Info

  • Financials
    21%
  • Technology
    18%
  • Industrials
    11%
  • Consumer Discretionary
    10%
  • Health Care
    10%
  • Consumer Staples
    8%
  • Telecommunications
    7%
  • Energy
    5%
  • Basic Materials
    5%
  • Utilities
    4%
  • Real Estate
    2%

The portfolio is diversified across multiple sectors, with financial services and technology leading the pack. These sectors are known for their growth potential, which aligns with the portfolio's objective of capital appreciation. Other sectors like industrials, consumer cyclicals, and healthcare also provide balance and resilience. This sector allocation ensures exposure to various economic segments, potentially mitigating risks associated with sector-specific downturns. However, investors should remain mindful of sector-specific risks and opportunities that may arise.

Regions Info

  • North America
    37%
  • Europe Developed
    30%
  • Asia Emerging
    13%
  • Asia Developed
    8%
  • Japan
    4%
  • Africa/Middle East
    3%
  • Latin America
    2%
  • Australasia
    1%
  • Europe Emerging
    1%

Geographically, the portfolio is well-diversified, with significant allocations in North America and Europe Developed, followed by Asia Emerging and Developed markets. This global exposure allows the portfolio to tap into growth opportunities across different regions, providing a hedge against localized economic downturns. The diversification into emerging markets offers potential for higher returns, albeit with increased risk. Investors should be aware of geopolitical and economic factors that could impact these regions, ensuring their investment aligns with their risk appetite.

Redundant positions Info

  • Vanguard FTSE All-World High Dividend Yield UCITS USD
    iShares MSCI ACWI UCITS ETF
    High correlation

The portfolio contains highly correlated assets, notably between the Vanguard FTSE All-World High Dividend Yield UCITS USD and the iShares MSCI ACWI UCITS ETF. This correlation suggests that these assets tend to move in tandem, which could limit diversification benefits. While such correlations can provide consistent returns during market upswings, they may also amplify losses during downturns. Investors should consider the impact of these correlations on their overall risk exposure and explore opportunities to further diversify their holdings.

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 exhibits overlapping assets, leading to high correlations. Therefore, optimizing the portfolio might not yield significant diversification benefits. Instead, focus on other areas such as adjusting the risk profile along the efficient frontier. Moving towards a riskier portfolio could involve increasing allocations to high-growth sectors, while a more conservative approach might include adding bonds. Prioritize diversification and risk management to enhance the portfolio's efficiency and alignment with personal financial goals.

Dividends Info

  • Vanguard FTSE All-World High Dividend Yield UCITS USD 2.90%
  • Weighted yield (per year) 0.58%

The portfolio's dividend yield is relatively modest at 0.58%, with the Vanguard FTSE All-World High Dividend Yield UCITS USD contributing a higher yield of 2.9%. This indicates a focus on growth rather than income generation. Investors seeking regular income may need to reassess their expectations or consider additional income-focused investments. However, the inclusion of high dividend yield assets provides some level of income, which can be reinvested to enhance overall returns.

Ongoing product costs Info

  • iShares MSCI ACWI UCITS ETF 0.20%
  • SPDR® MSCI Europe UCITS ETF 0.25%
  • Vanguard FTSE All-World High Dividend Yield UCITS USD 0.29%
  • Xtrackers MSCI Emerging Markets UCITS ETF 1C 0.18%
  • Weighted costs total (per year) 0.22%

The portfolio's total expense ratio (TER) is 0.22%, reflecting a cost-effective investment strategy. Low costs are crucial for maximizing net returns over time, as high fees can erode gains. The individual ETFs within the portfolio have competitive expense ratios, further supporting cost efficiency. Investors should continue to monitor these costs to ensure they remain aligned with their investment goals. Maintaining a focus on low-cost investments can significantly enhance long-term portfolio performance.

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