A balanced global portfolio with strong diversification and moderate risk exposure

Report created on Feb 4, 2025

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 composed of three ETFs: db x-trackers MSCI World Index UCITS DR 1C (60%), Xtrackers Stoxx Europe 600 UCITS ETF (30%), and Xtrackers MSCI Emerging Markets UCITS ETF 1C (10%). This structure offers a broad exposure to global equities, aligning well with a balanced investment strategy. The portfolio's asset allocation is heavily weighted towards stocks, with 70% in equities and no significant allocation to other asset classes. This composition is typical for a balanced portfolio seeking moderate growth while maintaining a reasonable level of risk. Consider diversifying into other asset classes like bonds or real estate for enhanced stability during market volatility.

Growth Info

Historically, the portfolio has performed well with a Compound Annual Growth Rate (CAGR) of 10.90%. This suggests that the portfolio has consistently grown over time, providing a strong return on investment. The maximum drawdown of -33.74% indicates the potential risk during market downturns. Comparing this performance to a benchmark can help gauge its effectiveness. The portfolio's performance aligns with its balanced classification, offering both growth and risk management. To maintain this performance, it may be beneficial to regularly review and adjust the portfolio's asset allocation in response to market conditions.

Projection Info

Using a Monte Carlo simulation with 1,000 iterations, the portfolio's future performance was projected. This method uses historical data to estimate potential outcomes, revealing a 9.30% annualized return across simulations. While most scenarios showed positive returns, with 967 simulations yielding gains, there's no guarantee of future performance. The 5th percentile projects a 10.2% return, while the 67th percentile suggests a 291.8% return, highlighting a wide range of potential outcomes. Regularly reassessing the portfolio's risk tolerance and diversification can help manage expectations and adapt to changing market conditions.

Asset classes Info

  • Stocks
    70%

The portfolio's asset class allocation is heavily skewed towards equities, with 70% in stocks. This provides significant growth potential but also exposes the portfolio to market volatility. Compared to a typical balanced portfolio, this allocation may lack diversification in other asset classes like bonds or real estate. Adding these classes can help reduce risk and provide more stability during market downturns. A well-diversified portfolio typically includes a mix of asset classes to balance growth and risk, ensuring a smoother investment journey over time.

Sectors Info

  • Technology
    18%
  • Financials
    12%
  • Consumer Discretionary
    8%
  • Industrials
    7%
  • Health Care
    7%
  • Telecommunications
    6%
  • Consumer Staples
    4%
  • Energy
    3%
  • Basic Materials
    2%
  • Utilities
    2%
  • Real Estate
    1%

The portfolio covers a wide range of sectors, with notable allocations in technology (18%), financial services (12%), and consumer cyclicals (8%). This sectoral distribution aligns closely with global benchmarks, offering a balanced exposure to various industries. However, the concentration in technology may result in higher volatility, especially during interest rate hikes or market corrections. To mitigate this risk, consider adjusting the sectoral allocation to ensure a more even distribution across sectors. This can help maintain stability and capitalize on diverse growth opportunities.

Regions Info

  • North America
    46%
  • Europe Developed
    9%
  • Asia Emerging
    5%
  • Asia Developed
    3%
  • Japan
    3%
  • Africa/Middle East
    1%
  • Australasia
    1%
  • Latin America
    1%

The portfolio's geographic allocation is primarily focused on North America (46%), followed by Europe Developed (9%) and Asia Emerging (5%). This distribution provides a strong exposure to developed markets, which are generally more stable and less volatile. However, the limited allocation to emerging markets may restrict potential growth opportunities. Diversifying further into regions like Asia and Latin America could enhance the portfolio's growth potential and reduce reliance on North American markets. Balancing geographic exposure can help manage risks associated with regional economic fluctuations.

Market capitalization Info

  • Mega-cap
    34%
  • Large-cap
    25%
  • Mid-cap
    11%

The portfolio's market capitalization allocation is concentrated in mega-cap (34%) and big-cap (25%) stocks, with minimal exposure to medium, small, and micro-cap stocks. This concentration in larger companies offers stability and lower volatility but may limit growth potential. Smaller companies often provide higher growth opportunities, albeit with increased risk. To enhance diversification and capture potential growth, consider incorporating more medium and small-cap stocks into the portfolio. This can help balance the risk-return profile and provide a more comprehensive exposure to the market.

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 risk-return profile can be optimized using the Efficient Frontier, which identifies the best possible risk-return ratio for the current assets. This optimization focuses on reallocating existing assets to achieve a more efficient balance between risk and return. While the portfolio is already well-diversified, exploring potential adjustments in asset allocation can further enhance its efficiency. By aligning the portfolio with the Efficient Frontier, investors can maximize returns for a given level of risk, ensuring a more strategic approach to portfolio management.

Ongoing product costs Info

  • db x-trackers MSCI World Index UCITS DR 1C 0.17%
  • Xtrackers MSCI Emerging Markets UCITS ETF 1C 0.18%
  • Weighted costs total (per year) 0.12%

The portfolio's costs are impressively low, with a total expense ratio (TER) of 0.12%. This cost efficiency supports better long-term performance by minimizing the drag on returns. Low costs are a significant advantage, allowing more of the portfolio's gains to be retained. Maintaining this cost structure is crucial for optimizing returns over time. To ensure continued cost efficiency, regularly review the expense ratios of the portfolio's components and consider lower-cost alternatives if necessary. This proactive approach can help sustain the portfolio's performance advantage.

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