Conservative Portfolio with High Diversification and Moderate Growth Potential for Risk-Averse Investors

Report created on Nov 22, 2024

Risk profile Info

2/7
Conservative
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification

Positions

The portfolio is composed of five ETFs, with a strong emphasis on global equities and bonds. The Vanguard FTSE All-World UCITS ETF dominates at 60%, providing broad exposure to global markets. The iShares Global Aggregate Bond UCITS ETF holds 25%, offering a stable fixed-income component. Smaller allocations to iShares MSCI World Small Cap, iShares S&P 500 Information Technology, and WisdomTree Core Physical Gold add diversification. This mix suggests a conservative approach, balancing growth with stability. It's a well-rounded portfolio, but the high equity exposure could be adjusted for even lower risk.

Growth Info

Historically, the portfolio has performed well, with a compound annual growth rate (CAGR) of 9.4%. The maximum drawdown was relatively moderate at -13.66%, indicating resilience during market downturns. The portfolio's performance is driven by its equity-heavy composition, which can deliver solid returns over the long term. However, the concentration in equities also means the portfolio is susceptible to market volatility. For those seeking consistent growth, this portfolio has delivered, but it's important to consider one's risk tolerance and investment horizon.

Projection Info

Using a Monte Carlo simulation with 1,000 iterations, the portfolio's future performance was projected. This method assesses potential outcomes by simulating random variables over time. The median projection suggests a portfolio growth of 365.89%, with an annualized return of 12.66%. Most simulations (997 out of 1,000) resulted in positive returns, highlighting the portfolio's potential for growth. However, the 5th percentile shows a potential downside risk of 87.02% growth, emphasizing the importance of risk management. It's crucial to align these projections with personal financial goals.

Asset classes Info

  • Stocks
    70%
  • Bonds
    25%
  • Other
    5%

The portfolio spans three main asset classes: stocks (approximately 70%), bonds (around 25%), and a small allocation to other assets like gold (5%). This diversification across asset classes helps balance risk and return. Stocks offer growth potential, while bonds provide income and stability. The gold allocation adds a hedge against inflation and currency fluctuations. This asset mix is suitable for those seeking a blend of growth and security. However, the high equity exposure may not suit those with a very low-risk tolerance.

Sectors Info

  • Technology
    21%
  • Financials
    10%
  • Consumer Discretionary
    7%
  • Industrials
    7%
  • Health Care
    7%
  • Telecommunications
    5%
  • Consumer Staples
    4%
  • Basic Materials
    3%
  • Energy
    3%
  • Real Estate
    2%
  • Utilities
    2%

Sector allocation shows a strong focus on technology, comprising over 20% of the portfolio. Financial services, consumer cyclicals, and industrials also have significant weights. This sector diversification reduces the risk of overexposure to any single economic segment. However, the heavy tech weighting could increase volatility due to the sector's inherent fluctuations. While this allocation supports growth, it might benefit from a more balanced sector distribution for those seeking stability. Consider reviewing sector weights to ensure they align with personal risk preferences.

Regions Info

  • North America
    47%
  • Europe Developed
    10%
  • Japan
    4%
  • Asia Emerging
    4%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is heavily weighted towards North America, accounting for nearly half of the allocation. Europe Developed and Japan also have notable shares. This geographic diversification offers exposure to various economies and markets, reducing region-specific risks. However, the concentration in North America might expose the portfolio to regional economic downturns. A more balanced geographic allocation could mitigate such risks and provide opportunities in emerging markets. It's essential to ensure geographic exposure aligns with long-term investment goals and risk appetite.

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 is close to the efficient frontier, meaning it offers a good balance of risk and return. However, it's not fully optimized, as there's potential for higher returns with slightly more risk. The efficient frontier represents portfolios that provide the highest expected return for a given level of risk. To optimize, consider adjusting the risk level to better match personal preferences. While the current allocation is efficient, exploring different risk-return combinations could enhance performance and align with financial goals.

Dividends Info

  • iShares Global Aggregate Bond UCITS Dist 1.50%
  • Weighted yield (per year) 0.38%

The portfolio's dividend yield is modest at 0.38%, primarily driven by the iShares Global Aggregate Bond UCITS Dist ETF, which offers a 1.5% yield. While dividends provide a steady income stream, this portfolio is more growth-focused. The low yield suggests a reliance on capital appreciation rather than income generation. Investors seeking higher income might consider increasing exposure to dividend-paying assets. However, it's crucial to balance income needs with growth objectives to maintain overall portfolio health and meet financial goals.

Ongoing product costs Info

  • iShares Global Aggregate Bond UCITS Dist 0.10%
  • iShares MSCI World Small Cap UCITS ETF USD (Acc) 0.35%
  • iShares S&P 500 USD Information Technology Sector UCITS 0.15%
  • Vanguard FTSE All-World UCITS ETF USD Accumulation 0.22%
  • Weighted costs total (per year) 0.18%

Portfolio costs are relatively low, with a total expense ratio (TER) of 0.18%. The iShares Global Aggregate Bond UCITS Dist ETF has the lowest cost at 0.1%, while the iShares MSCI World Small Cap ETF has the highest at 0.35%. Low costs are beneficial as they enhance net returns over time. Keeping expenses minimal is crucial for maximizing long-term gains. Although the current costs are competitive, regularly reviewing and comparing costs with similar products can ensure the portfolio remains cost-efficient.

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