A high-risk aggressive portfolio with significant cryptocurrency exposure and moderate diversification

Report created on Jan 8, 2025

Risk profile Info

6/7
Aggressive
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio is heavily weighted towards equities and cryptocurrency, with a significant 50.8% in the iShares Core MSCI World UCITS ETF and 37.1% in WisdomTree Physical Bitcoin. This composition reflects a high-risk, high-reward strategy, typical of aggressive portfolios. Compared to standard benchmarks, this portfolio is less diversified, with a strong focus on global equities and digital assets. To enhance diversification, consider integrating additional asset classes like bonds or real estate, which can provide stability during market volatility.

Growth Info

Historically, the portfolio has delivered a respectable compound annual growth rate (CAGR) of 10.08%, though it experienced a substantial maximum drawdown of -37.72%. This indicates potential for strong returns but also significant volatility. Compared to broader market indices, the performance aligns with aggressive risk profiles. Investors should be mindful that past performance doesn't guarantee future results. To mitigate risk, consider strategies such as rebalancing or incorporating less volatile assets.

Projection Info

Using Monte Carlo simulations, which model potential future outcomes based on historical data, the portfolio shows a wide range of possible returns. While the median projection forecasts a slight loss, the potential upside reaches 96.13%. However, there's also a chance of severe losses. These projections underscore the inherent uncertainty in investing, particularly with high-risk assets like Bitcoin. Investors should regularly reassess their risk tolerance and consider diversifying to stabilize potential outcomes.

Asset classes Info

  • Stocks
    63%
  • Other
    37%

The portfolio is primarily composed of stocks (62.7%) and Bitcoin (classified as "Other"), with minimal exposure to bonds and cash. This allocation supports aggressive growth but limits downside protection. Compared to typical diversified portfolios, there's a notable absence of fixed income, which can buffer against equity market downturns. To achieve a more balanced risk-return profile, consider adding bonds or other low-correlated assets that can provide income and reduce volatility.

Sectors Info

  • Technology
    17%
  • Financials
    10%
  • Consumer Discretionary
    7%
  • Health Care
    7%
  • Industrials
    6%
  • Telecommunications
    5%
  • Consumer Staples
    4%
  • Energy
    2%
  • Basic Materials
    2%
  • Utilities
    2%
  • Real Estate
    1%

The portfolio's sector allocation is led by technology (16.8%), followed by financial services and consumer cyclicals. This sector concentration aligns with global equity trends but may expose the portfolio to sector-specific risks, particularly in tech, which can be volatile. Compared to common benchmarks, the portfolio mirrors sector weights but could benefit from increased diversification. Consider broadening exposure to underrepresented sectors like utilities or real estate to mitigate sector-specific risks.

Regions Info

  • North America
    47%
  • Europe Developed
    9%
  • Japan
    3%
  • Australasia
    1%
  • Asia Developed
    1%
  • Asia Emerging
    1%

Geographically, the portfolio is heavily skewed towards North America (46.9%), with limited exposure to emerging markets. This concentration may offer stability but limits growth potential from developing regions. Compared to global benchmarks, there's a significant underweight in emerging markets. To enhance geographic diversification and capture growth opportunities, consider increasing allocations to regions like Asia or Latin America, which can provide a hedge against regional economic downturns.

Redundant positions Info

  • Vanguard FTSE All-World UCITS ETF USD Accumulation
    iShares Core MSCI World UCITS ETF USD (Acc)
    High correlation

The portfolio contains highly correlated assets, notably between the Vanguard FTSE All-World and iShares MSCI World ETFs. This correlation indicates that these assets tend to move together, potentially reducing diversification benefits. In volatile markets, such correlation can amplify risks. To improve diversification, consider replacing one of these ETFs with an asset that has lower correlation, thus enhancing the portfolio's ability to withstand 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 for a better risk-return ratio by addressing asset overlap and correlation. The Efficient Frontier suggests potential for higher expected returns of 12.84% without increasing risk. This involves reallocating existing assets rather than adding new ones. Investors should focus on reducing correlated holdings to achieve this efficiency, which can enhance returns while maintaining the current risk level.

Ongoing product costs Info

  • iShares Core MSCI World UCITS ETF USD (Acc) 0.20%
  • Vanguard FTSE All-World UCITS ETF USD Accumulation 0.22%
  • Weighted costs total (per year) 0.13%

The portfolio boasts impressively low costs, with a total expense ratio (TER) of 0.13%. This aligns well with best practices, as minimizing fees can significantly enhance long-term returns. Compared to industry averages, these costs are competitive, supporting efficient compounding of returns. Investors should continue monitoring expenses and consider low-cost alternatives if fees rise, ensuring that cost efficiency remains a strength of the portfolio.

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