A balanced portfolio with strong US focus and moderate European exposure

Report created on Feb 13, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio is composed of three ETFs, with a significant 70% allocation to the Lyxor S&P 500 UCITS ETF, 20% to the Amundi Stoxx Europe 600 UCITS ETF, and 10% to the Lyxor EuroMTS 5-7Y Investment Grade ETF. This structure heavily favors equities, particularly those in the US market, with a smaller allocation to European stocks and bonds. This composition is typical for a balanced portfolio, aiming to capture equity growth while maintaining some bond exposure to mitigate risk. Consider reviewing the bond allocation to ensure it aligns with your risk tolerance and investment goals, particularly in volatile market conditions.

Growth Info

Historically, the portfolio has delivered a robust Compound Annual Growth Rate (CAGR) of 19.22%, reflecting strong returns from US equities. However, it also experienced a maximum drawdown of -31.88%, indicating significant volatility during market downturns. Comparing this to a benchmark like the S&P 500, which has similar volatility, highlights the importance of diversification. While past performance is not predictive of future results, it suggests that the portfolio has capitalized on favorable market conditions. Continually assess your risk tolerance to ensure comfort with potential drawdowns.

Projection Info

Using Monte Carlo simulations, which project potential future outcomes based on historical data, the portfolio shows promising growth prospects. With 1,000 simulations, the 5th percentile indicates a 79% portfolio value increase, while the median (50th percentile) suggests a 401% increase. It's important to note that these projections are not guarantees but offer insights into potential performance under various market conditions. Given the positive outlook, consider maintaining your current strategy while staying informed about market trends.

Asset classes Info

  • Stocks
    90%
  • Bonds
    10%

The portfolio's asset class allocation is 90% stocks and 10% bonds, aligning with a balanced investment approach. This heavy equity focus provides growth potential but also increases exposure to market volatility. Compared to common benchmarks, this allocation may be slightly aggressive for a balanced profile. To enhance diversification, consider evaluating whether a higher bond allocation could help stabilize returns, particularly in uncertain economic environments.

Sectors Info

  • Technology
    25%
  • Financials
    13%
  • Health Care
    10%
  • Consumer Discretionary
    10%
  • Industrials
    9%
  • Telecommunications
    7%
  • Consumer Staples
    6%
  • Energy
    3%
  • Utilities
    2%
  • Basic Materials
    2%
  • Real Estate
    2%

Sector allocation is concentrated, with 25% in technology, 13% in financial services, and 10% each in healthcare and consumer cyclicals. This tech-heavy focus may lead to higher volatility, especially during interest rate changes. Compared to benchmarks, the portfolio is well-diversified across sectors, but the tech concentration could pose risks. Regularly review sector performance and economic trends to decide if rebalancing is needed to mitigate sector-specific risks.

Regions Info

  • North America
    70%
  • Europe Developed
    20%

Geographic allocation is predominantly in North America at 70%, with 20% in developed Europe. This bias towards the US market aligns with global benchmarks but limits exposure to other regions that may offer growth opportunities. While the US has been a strong performer, consider exploring increased diversification into emerging markets or Asia to reduce reliance on a single region. This could help balance potential risks associated with regional economic shifts.

Market capitalization Info

  • Mega-cap
    42%
  • Large-cap
    31%
  • Mid-cap
    16%
  • Small-cap
    1%

The portfolio's market capitalization distribution includes 42% in mega-cap, 31% in big-cap, 16% in medium-cap, and a minimal 1% in small-cap stocks. This skew towards larger companies typically offers stability and lower volatility compared to smaller-cap stocks, which can be more volatile but have higher growth potential. This distribution is consistent with a balanced risk profile, but exploring small and medium-cap opportunities could enhance growth potential.

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 could potentially be optimized using the Efficient Frontier, which identifies the best possible risk-return ratio for a given set of assets. This approach focuses on reallocating existing holdings for maximum efficiency, not necessarily increasing diversification. Consider periodically reviewing your portfolio's alignment with the Efficient Frontier to ensure it remains optimized for your risk tolerance and return objectives.

Ongoing product costs Info

  • Amundi Stoxx Europe 600 UCITS ETF C 0.07%
  • Multi Units Luxembourg - Lyxor EuroMTS 5-7Y Investment Grade (DR) UCITS ETF 0.16%
  • Lyxor S&P 500 UCITS ETF - C-EUR 0.09%
  • Weighted costs total (per year) 0.09%

With a Total Expense Ratio (TER) of 0.09%, the portfolio is cost-efficient, supporting better long-term returns. Low costs mean more of your investment returns are retained, enhancing compounding over time. This efficient cost structure is a positive aspect of the portfolio, aligning well with best practices for minimizing expenses. Continue to monitor TERs and consider cost-effective alternatives if any changes arise in your investment strategy.

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