Balanced Portfolio with Strong Technology Focus and High Diversification

Report created on Nov 12, 2024

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 primarily composed of two ETFs, with the Vanguard FTSE All-World UCITS ETF making up 80% and the Lyxor MSCI World Information Technology TR UCITS ETF at 20%. This composition indicates a broad exposure to global markets with a significant tilt towards the technology sector. The balanced risk profile suggests a moderate approach to risk, aiming for steady growth while maintaining a safety net. The high diversification score reflects a well-distributed investment across different sectors and regions, reducing the impact of any single market event on the overall portfolio performance.

Growth Info

Historically, the portfolio has performed well, with a compound annual growth rate (CAGR) of 13.81%. This impressive growth rate suggests that the portfolio has been able to capitalize on market uptrends effectively. However, it also experienced a maximum drawdown of -26.61%, highlighting its vulnerability during market downturns. The fact that 90% of returns are concentrated in just 22 days indicates a reliance on a few significant market movements for performance. This pattern underscores the importance of staying invested to capture these key moments.

Projection Info

Using a Monte Carlo simulation, which models a range of possible outcomes based on historical data, the portfolio shows promising future projections. Assuming a hypothetical initial investment, the median outcome suggests a potential increase to 778.64% over the simulation period. The 5th percentile outcome is 161.0%, indicating a conservative estimate, while the 67th percentile is an impressive 1,175.76%. With 999 out of 1,000 simulations showing positive returns, the portfolio appears well-positioned for future growth, though it's essential to consider the inherent uncertainties of such projections.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted towards stocks, comprising 99.95% of the asset allocation. This concentration in equities indicates a growth-oriented strategy, which can offer high returns but also comes with increased volatility. The minimal presence of other asset classes, such as cash and non-classified investments, suggests a lack of defensive assets that could provide stability during market downturns. To balance growth with risk mitigation, consider incorporating a small portion of bonds or other fixed-income assets to cushion against potential market fluctuations.

Sectors Info

  • Technology
    40%
  • Financials
    13%
  • Health Care
    9%
  • Consumer Discretionary
    8%
  • Industrials
    8%
  • Telecommunications
    6%
  • Consumer Staples
    5%
  • Energy
    3%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    2%

Sector allocation reveals a significant emphasis on technology, which accounts for 40.16% of the portfolio. This focus aligns with the global trend of technological advancement and innovation, potentially driving future growth. However, it also introduces sector-specific risks, such as regulatory changes or technological disruptions. Other sectors like financial services, healthcare, and consumer cyclicals provide some diversification, but their smaller allocations may limit their impact. To enhance sector diversification, consider adjusting the allocations to reduce overexposure to any single industry.

Regions Info

  • North America
    70%
  • Europe Developed
    13%
  • Japan
    5%
  • Asia Emerging
    5%
  • Asia Developed
    3%
  • Australasia
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is predominantly invested in North America, which makes up 69.92% of the allocation. This strong focus on a single region could expose the portfolio to regional economic cycles and geopolitical risks. While Europe Developed and Japan provide additional exposure, their smaller allocations may not fully offset this concentration. Diversifying further into emerging markets or other developed regions could help spread risk and capture growth opportunities in different parts of the world. Balancing regional exposure can enhance resilience against localized downturns.

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 efficient frontier concept suggests an optimal portfolio offers the highest expected return for a given level of risk. Currently, the portfolio is well-diversified but heavily skewed towards technology and North America, which may not be optimal. To align closer to the efficient frontier, consider adjusting the sector and geographic allocations to balance risk and return more effectively. By incorporating a mix of asset classes with varying correlations, the portfolio can achieve a more optimal risk-return profile, enhancing overall performance potential.

Ongoing product costs Info

  • Lyxor MSCI World Information Technology TR UCITS 0.30%
  • Vanguard FTSE All-World UCITS ETF USD Accumulation 0.22%
  • Weighted costs total (per year) 0.24%

The portfolio's total expense ratio (TER) is 0.24%, which is relatively low and reflects cost-efficient management. The Vanguard FTSE All-World UCITS ETF has a TER of 0.22%, while the Lyxor MSCI World Information Technology TR UCITS ETF is slightly higher at 0.3%. Keeping investment costs low is crucial for maximizing net returns, as high fees can erode gains over time. The current cost structure is favorable, but it's always worth reviewing periodically to ensure competitive rates. Consider exploring other low-cost options if necessary to maintain cost efficiency.

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