A balanced global portfolio with strong diversification and moderate risk exposure

Report created on Dec 28, 2024

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 80% equity and 20% bonds, with a focus on global exposure through ETFs. This composition aligns well with a balanced investment strategy, offering growth potential through equity investments while maintaining stability with bonds. A typical balanced portfolio might have a similar equity-bond split, making this allocation suitable for moderate risk tolerance. To further enhance diversification, consider including additional asset classes like real estate or commodities, which can provide different risk-return dynamics and potential inflation hedges.

Growth Info

Historically, the portfolio has achieved a CAGR of 8.02%, indicating a solid growth rate over time. This performance is comparable to many balanced portfolios, which often target annual returns in the 7-9% range. However, it's important to note the maximum drawdown of -28.38%, which highlights potential volatility during market downturns. While past performance is a useful benchmark, it doesn't guarantee future results. To mitigate potential drawdowns, consider strategies like rebalancing or adding more defensive assets to cushion against market fluctuations.

Projection Info

Monte Carlo simulations, which use historical data to estimate future outcomes, project an annualized return of 7.41% for this portfolio. While simulations provide valuable insights, they rely on historical patterns that may not repeat. The 5th percentile projection shows a potential loss of -24.1%, emphasizing the importance of risk management. To improve outcomes, consider adjusting asset allocations based on changing market conditions or personal risk tolerance. Regularly reviewing projections can help ensure alignment with long-term investment goals.

Asset classes Info

  • Stocks
    79%
  • Bonds
    20%
  • Cash
    1%

The portfolio is heavily weighted towards stocks, comprising 79.25% of the allocation, with bonds making up 19.74%. This allocation provides a strong growth potential but may expose the portfolio to higher volatility. Compared to typical balanced portfolios, which might have a more even split between stocks and bonds, this portfolio leans more towards growth. For improved stability, consider increasing bond exposure or adding alternative asset classes. This can help balance risk and return, especially during periods of market uncertainty.

Sectors Info

  • Financials
    21%
  • Technology
    16%
  • Consumer Discretionary
    8%
  • Industrials
    6%
  • Telecommunications
    6%
  • Health Care
    6%
  • Consumer Staples
    5%
  • Energy
    4%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    1%

Sector allocation shows a notable concentration in Financial Services (21.46%) and Technology (16.26%). While these sectors can drive growth, they also introduce sector-specific risks. For instance, financials may be sensitive to interest rate changes, while tech may face regulatory challenges. A broader distribution across sectors can reduce these risks. Consider diversifying into less represented sectors like Utilities or Real Estate, which may offer stability during economic downturns. This approach can enhance resilience and reduce volatility.

Regions Info

  • North America
    44%
  • Europa Schwellenländer
    20%
  • Europe Developed
    8%
  • Japan
    3%
  • Asien Schwellenländer
    2%
  • Asien
    2%
  • Australasia
    1%
  • Afrika/Mittlerer Osten
    1%

The geographic allocation is heavily tilted towards North America (43.65%) and Europe Emerging (20.09%). While this provides exposure to established and growing markets, it may limit diversification benefits. Compared to global benchmarks, there's an underweight in Asia and Latin America, which could offer growth opportunities. To enhance geographic diversification, consider increasing exposure to underrepresented regions. This can provide a hedge against regional economic downturns and tap into diverse growth dynamics across the globe.

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 current asset allocation can be optimized using the Efficient Frontier, which identifies the best possible risk-return ratio. This involves adjusting the weights of existing assets to achieve the maximum return for a given level of risk. While diversification is important, efficiency focuses on optimizing the current asset mix. Regularly reviewing allocations and making necessary adjustments can enhance portfolio performance. This approach ensures that the portfolio remains aligned with your risk tolerance and investment objectives.

Dividends Info

  • iShares Global Aggregate Bond UCITS Dist 1.50%
  • Weighted yield (per year) 0.30%

The portfolio's overall dividend yield is 0.3%, with the iShares Global Aggregate Bond ETF contributing a yield of 1.5%. Dividends can provide a steady income stream, which is beneficial for reinvestment or cash flow needs. For investors seeking income, consider increasing exposure to high-dividend-paying assets. This can enhance total returns and provide a cushion against market volatility. However, focus on the sustainability of dividends, as high yields may not always be reliable indicators of financial health.

Ongoing product costs Info

  • iShares Global Aggregate Bond UCITS Dist 0.10%
  • iShares MSCI Poland UCITS 0.74%
  • iShares MSCI World Momentum Factor UCITS 0.30%
  • iShares MSCI ACWI UCITS ETF 0.20%
  • Weighted costs total (per year) 0.30%

The portfolio's total expense ratio (TER) is 0.3%, which is relatively low and supports better long-term performance by minimizing costs. Lower costs mean more of your returns are kept, a crucial factor for compounding over time. Regularly reviewing and optimizing costs can further enhance returns. Consider exploring alternative funds or ETFs with similar exposures but lower fees. This can help maximize returns without significantly altering the portfolio's risk profile or asset allocation.

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