A balanced ESG-focused portfolio with significant exposure to the US market and gold mining sector

Report created on Dec 8, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

The portfolio is primarily composed of ETFs, with the iShares MSCI USA ESG Screened UCITS ETF making up a significant 82.29%. This indicates a strong focus on socially responsible investing in the US market. The VanEck Gold Miners UCITS ETF, at 10.06%, adds exposure to the gold mining sector, providing a hedge against inflation and economic downturns. The iShares MSCI India UCITS ETF USD Acc at 7.65% offers a foothold in the emerging Indian market. This composition suggests a strategy focused on growth with a moderate risk profile. To enhance diversification, consider adding assets from different regions or sectors to balance out potential market-specific risks.

Growth Info

Historically, the portfolio has delivered a robust compound annual growth rate (CAGR) of 17.85%, which indicates strong past performance. However, the maximum drawdown of -33.04% highlights potential volatility and risk. It's important to remember that past performance is not indicative of future results, as market conditions can change. This historical insight suggests that while the portfolio can achieve high returns, it is also susceptible to significant downturns. To mitigate this, consider strategies to manage risk, such as diversifying across more asset classes or sectors.

Projection Info

The Monte Carlo simulation, which uses historical data to project future outcomes, suggests a wide range of potential returns. With 1,000 simulations, the portfolio shows a 5th percentile end value of 55.08% and a median of 643.43%, indicating a strong potential for growth. The annualized return across simulations is 18.48%, reflecting optimism for future performance. However, simulations are based on historical data and assumptions, which may not fully account for future market changes. Regularly reviewing and adjusting the portfolio can help align it with evolving market conditions and personal investment goals.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted towards stocks, with 99.79% exposure, leaving minimal allocation to cash and bonds. This concentration in equities suggests a focus on growth but also increases exposure to market volatility. While equities can offer higher returns, they also come with higher risk, particularly in market downturns. Consider introducing more bonds or cash equivalents to balance risk and provide a buffer during volatile periods. This could help stabilize returns and offer liquidity when needed.

Sectors Info

  • Technology
    30%
  • Financials
    14%
  • Basic Materials
    12%
  • Consumer Discretionary
    11%
  • Health Care
    10%
  • Telecommunications
    8%
  • Industrials
    7%
  • Consumer Staples
    3%
  • Real Estate
    2%
  • Utilities
    2%
  • Energy
    2%

The portfolio's sector allocation is concentrated, with a significant 30.02% in technology and notable positions in financial services and basic materials. This concentration can lead to higher volatility if these sectors experience downturns. While technology has been a strong performer, it's essential to consider the risks of sector concentration. Diversifying into underrepresented sectors like utilities or consumer defensive could provide more stability and reduce potential volatility. This balanced approach can help manage sector-specific risks and enhance overall portfolio resilience.

Regions Info

  • North America
    89%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Europe Developed
    1%

Geographically, the portfolio is predominantly exposed to North America, with 88.72% allocation, which limits diversification benefits. This heavy reliance on the US market exposes the portfolio to regional economic and political risks. To mitigate this, consider increasing exposure to other regions like Europe or Asia, which can offer different growth dynamics and risk profiles. A more geographically diversified portfolio can help cushion against regional downturns and take advantage of global growth opportunities.

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 current asset allocation can be optimized using the Efficient Frontier, which helps identify the best possible risk-return ratio. This process involves adjusting the weightings of existing assets to achieve higher returns for a given level of risk or lower risk for a given return. While the portfolio is already focused on growth, optimization could involve redistributing some weight from the heavily concentrated US equities to less correlated assets. This strategy can enhance the portfolio's efficiency, potentially improving risk-adjusted returns without necessarily adding new assets.

Ongoing product costs Info

  • VanEck Gold Miners UCITS ETF 0.53%
  • iShares MSCI India UCITS ETF USD Acc 0.65%
  • iShares MSCI USA ESG Screened UCITS ETF 0.07%
  • Weighted costs total (per year) 0.16%

The portfolio's total expense ratio (TER) is relatively low at 0.16%, which is beneficial for long-term returns. Lower costs mean more of your investment's returns are retained, enhancing compounding over time. The iShares MSCI USA ESG Screened UCITS ETF has the lowest TER at 0.07%, contributing to the overall cost efficiency. However, the VanEck Gold Miners and iShares MSCI India ETFs have higher costs. Regularly reviewing and minimizing costs where possible can improve net returns. Consider cost-effective alternatives if they align with your investment strategy and goals.

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