A well-diversified global portfolio with a balanced approach and low-cost ETFs

Report created on Mar 1, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification

Positions

The portfolio consists of three Vanguard ETFs, with a 60% allocation to the Vanguard FTSE All-World UCITS ETF, 30% to the Vanguard S&P 500 UCITS ETF, and 10% to the Vanguard Global Aggregate Bond UCITS ETF. This composition indicates a strong focus on equities, which dominate 90% of the portfolio, while bonds make up the remaining 10%. Compared to a typical balanced portfolio, this allocation leans more towards equities, suggesting a moderate risk profile. To maintain this balance, consider reviewing the equity-to-bond ratio periodically to align with evolving market conditions and personal risk tolerance.

Growth Info

Historically, the portfolio has performed well, achieving a Compound Annual Growth Rate (CAGR) of 11.58%. This indicates strong growth over time, with the hypothetical initial investment significantly increasing in value. However, the maximum drawdown of -30.90% highlights potential volatility during market downturns. Comparing this to a benchmark, such as a global equity index, can provide context for performance expectations. Regularly monitoring performance against benchmarks can ensure the portfolio continues to meet growth objectives while managing risk effectively.

Projection Info

Forward projections using Monte Carlo simulations, which assess potential outcomes based on historical data, show an annualized return of 9.58%. This suggests a positive outlook, with 976 out of 1,000 simulations resulting in positive returns. However, it's important to note that these simulations are based on past data and cannot predict future results with certainty. For a balanced approach, consider diversifying further or adjusting allocations to manage potential risks while aiming for consistent returns.

Asset classes Info

  • Stocks
    90%
  • Bonds
    10%

The portfolio's asset class allocation is heavily weighted towards stocks at 90%, with bonds making up the remaining 10%. This allocation provides growth potential but may expose the portfolio to higher volatility. Compared to a typical balanced portfolio, which may have a higher bond allocation, this structure suggests a moderate to aggressive risk tolerance. To enhance diversification and reduce risk, consider increasing bond exposure or exploring alternative asset classes that align with long-term investment goals.

Sectors Info

  • Technology
    25%
  • Financials
    14%
  • Consumer Discretionary
    10%
  • Health Care
    9%
  • Telecommunications
    8%
  • Industrials
    8%
  • Consumer Staples
    5%
  • Energy
    3%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    2%

Sector allocation shows a concentration in technology, which accounts for 25% of the portfolio, followed by financial services at 14%. This tech-heavy focus may lead to higher volatility, especially during periods of interest rate changes. While the sector composition aligns with global benchmarks, consider periodically reviewing sector weights to ensure balanced exposure. Diversifying across more sectors can help mitigate risks associated with sector-specific downturns and enhance overall portfolio stability.

Regions Info

  • North America
    70%
  • Europe Developed
    9%
  • Japan
    3%
  • Asia Emerging
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    1%

The portfolio's geographic allocation is predominantly in North America, comprising 70% of the assets, with limited exposure to other regions. This concentration may increase vulnerability to regional economic fluctuations. Comparing this to global benchmarks, which often have more balanced regional exposure, highlights an opportunity to diversify geographically. Expanding investments in underrepresented regions can help reduce risk and capture growth opportunities in emerging markets.

Market capitalization Info

  • Mega-cap
    42%
  • Large-cap
    31%
  • Mid-cap
    16%

The portfolio is primarily invested in large-cap stocks, with 42% in mega-cap and 31% in big-cap companies. This focus on large, established companies provides stability but may limit exposure to the growth potential of smaller firms. To enhance diversification, consider incorporating medium or small-cap stocks, which can offer higher growth prospects and contribute to a more balanced risk-return profile. Regularly reviewing market capitalization exposure ensures alignment with investment objectives.

Redundant positions Info

  • Vanguard S&P 500 UCITS Acc
    Vanguard FTSE All-World UCITS ETF USD Accumulation
    High correlation

The portfolio contains highly correlated assets, particularly between the Vanguard S&P 500 UCITS ETF and the Vanguard FTSE All-World UCITS ETF. High correlation means these assets tend to move together, which can limit diversification benefits during market downturns. To optimize risk management, consider reducing overlap by selecting assets with lower correlation. This approach can enhance diversification and improve the portfolio's resilience to market fluctuations.

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 could be optimized using the Efficient Frontier, which seeks the best possible risk-return ratio based on current assets. However, the presence of highly correlated assets may limit optimization potential. Before optimizing, consider addressing asset overlap to enhance diversification. By focusing on a more efficient allocation, the portfolio can achieve a desirable balance between risk and return, aligning with long-term investment goals.

Ongoing product costs Info

  • Vanguard Global Aggregate Bond UCITS ETF USD Hedged Accumulation 0.10%
  • Vanguard S&P 500 UCITS Acc 0.07%
  • Vanguard FTSE All-World UCITS ETF USD Accumulation 0.22%
  • Weighted costs total (per year) 0.16%

The portfolio's total expense ratio (TER) is 0.16%, which is impressively low and supports better long-term performance by minimizing costs. This cost efficiency is a significant advantage, as lower fees can enhance net returns over time. Regularly reviewing and comparing TERs of alternative investment options can ensure continued cost-effectiveness. Maintaining low costs should remain a priority to maximize the portfolio's growth potential.

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