Balanced and Broadly Diversified Portfolio with High North American Exposure and Strong Historic Performance

Report created on Dec 3, 2024

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 made up of two ETFs, with the iShares MSCI ACWI UCITS ETF taking up 85% and the iShares MSCI World Small Cap UCITS ETF USD (Acc) covering 15%. This composition indicates a focus on global equity markets with a small cap tilt. The portfolio is broadly diversified, which means it is spread across various sectors and regions, reducing the risk of being overly concentrated in any single area. This diversification aligns well with a balanced risk profile, providing a good mix of growth potential and risk management.

Growth Info

Historically, the portfolio has shown strong performance with a compound annual growth rate (CAGR) of 12.89%. This suggests that an initial investment would have grown significantly over time, despite experiencing a maximum drawdown of -34.52%. The portfolio's ability to recover from downturns and generate solid returns highlights its resilience. While past performance is no guarantee of future results, this track record indicates that the portfolio has been well-positioned to capitalize on market opportunities while managing risk effectively.

Projection Info

Using a Monte Carlo simulation with 1,000 iterations, the portfolio's future performance was projected. This method uses random sampling to model potential outcomes, providing a range of possible future returns. Assuming a hypothetical initial investment, the simulation shows a median expected return of 344.44%, with a 5th percentile return of 46.15% and a 67th percentile return of 498.68%. These results suggest a high probability of positive returns, with 995 out of 1,000 simulations yielding gains, reinforcing the portfolio's potential for growth.

Asset classes Info

  • Stocks
    99%

The portfolio is heavily weighted towards stocks, comprising 99.45% of the total allocation. This high equity exposure indicates a focus on capital appreciation and growth. Minimal allocations to cash, bonds, and other assets suggest a strategic decision to prioritize equities. While this approach can lead to higher returns, it also involves higher volatility. To manage risk, consider periodically reviewing the asset class allocation to ensure it aligns with long-term investment objectives and risk tolerance.

Sectors Info

  • Technology
    24%
  • Financials
    16%
  • Industrials
    11%
  • Consumer Discretionary
    11%
  • Health Care
    10%
  • Telecommunications
    7%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    4%
  • Real Estate
    3%
  • Utilities
    3%

Sector allocation within the portfolio is diverse, with significant exposure to technology (24.38%), financial services (16.32%), and industrials (11.26%). This spread across various sectors helps mitigate sector-specific risks and capture potential growth opportunities. However, the concentration in technology may lead to increased volatility, given the sector's inherent risks. Regularly reviewing sector allocations can help maintain balance and ensure alignment with evolving market conditions and investment goals.

Regions Info

  • North America
    69%
  • Europe Developed
    14%
  • Japan
    6%
  • Asia Emerging
    4%
  • Asia Developed
    3%
  • Australasia
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%

The portfolio's geographic composition is predominantly North American (68.71%), with additional exposure to developed Europe, Japan, and emerging Asian markets. This regional distribution provides a mix of stability and growth potential, leveraging the economic strengths of these areas. However, the heavy North American focus might expose the portfolio to region-specific risks. Consider periodically reassessing geographic allocations to ensure they remain aligned with global economic trends and personal investment objectives.

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 optimization chart suggests that there is room for improvement in terms of expected return. While the current portfolio is performing well, an optimized version with the same risk level could potentially achieve a higher expected return of 13.26%. Moving along the efficient frontier, investors can adjust their portfolio to either increase risk for potentially higher returns or reduce risk for more stability. However, before optimizing, it's essential to ensure that the current risk level aligns with personal risk tolerance and investment goals.

Ongoing product costs Info

  • iShares MSCI World Small Cap UCITS ETF USD (Acc) 0.35%
  • iShares MSCI ACWI UCITS ETF 0.20%
  • Weighted costs total (per year) 0.22%

The portfolio's total expense ratio (TER) is 0.22%, indicating relatively low costs associated with maintaining the investments. This low-cost structure is beneficial for maximizing net returns over time, as lower fees mean more of the portfolio's returns are retained. Keeping investment costs minimal is a crucial aspect of an effective investment strategy. Periodically reviewing and comparing expense ratios can help ensure that the portfolio remains cost-efficient and aligned with financial goals.

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