Balanced Broadly Diversified Portfolio with Strong US Focus and High Technology Exposure

Report created on Dec 6, 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 composed of four ETFs, with Vanguard S&P 500 and Vanguard FTSE All-World each holding 35%. The remaining 30% is split between iShares MSCI India and VanEck Semiconductor ETFs. This mix results in a balanced profile, reflecting a moderate risk tolerance. The portfolio's composition demonstrates a broad diversification across different regions and sectors. This is crucial for risk management and potential growth. To maintain this balance, it's essential to monitor the allocation periodically and ensure it aligns with the investor's goals and risk appetite.

Growth Info

Historically, the portfolio has shown a strong performance, with a compound annual growth rate (CAGR) of 17.89%. The maximum drawdown was -19.88%, indicating the portfolio's resilience during market downturns. This historical data highlights the potential for significant returns over time, but also underscores the inherent risks associated with market volatility. To capitalize on this performance, it's important to stay committed to the investment strategy and avoid making impulsive decisions based on short-term market fluctuations.

Projection Info

A Monte-Carlo simulation, which uses random sampling to predict future outcomes, was conducted with 1,000 simulations. Assuming a hypothetical initial investment, the results showed a 5th percentile return of 236.4% and a 50th percentile return of 1,148.02%. The annualized return across all simulations was 21.47%. This indicates a high likelihood of positive returns, but also highlights the variability in potential outcomes. It's important for investors to understand that these projections are based on historical data and assumptions, and actual future performance may vary.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted towards stocks, comprising 99.95% of the total allocation. This high equity exposure suggests a focus on capital appreciation and growth potential. While stocks offer the opportunity for higher returns, they also come with increased volatility. For investors seeking to reduce risk, it may be beneficial to consider diversifying into other asset classes, such as bonds or real estate, to create a more balanced risk-return profile.

Sectors Info

  • Technology
    37%
  • Financials
    14%
  • Consumer Discretionary
    9%
  • Health Care
    9%
  • Industrials
    8%
  • Telecommunications
    7%
  • Consumer Staples
    5%
  • Energy
    4%
  • Basic Materials
    3%
  • Utilities
    3%
  • Real Estate
    2%

The sector allocation is dominated by technology, which accounts for 37.25% of the portfolio. Financial services and consumer cyclicals follow with 14.24% and 9.09%, respectively. This concentration in technology reflects a bet on its continued growth and innovation. However, it's important to be aware of the risks associated with sector concentration, such as increased vulnerability to industry-specific downturns. To mitigate these risks, consider diversifying across a broader range of sectors.

Regions Info

  • North America
    69%
  • Europe Developed
    7%
  • Asia Developed
    3%
  • Asia Emerging
    2%
  • Japan
    2%
  • Australasia
    1%

Geographically, the portfolio has a strong focus on North America, with 69.15% of assets allocated there. Europe Developed and Asia Developed follow, with much smaller allocations. This regional bias towards North America can be advantageous given its economic strength but also poses concentration risks. To enhance diversification, consider increasing exposure to other regions, potentially benefiting from growth in emerging markets and reducing dependency on a single economic area.

Redundant positions Info

  • Vanguard S&P 500 UCITS Acc
    Vanguard FTSE All-World UCITS ETF USD Accumulation
    High correlation

The portfolio contains highly correlated assets, particularly between the Vanguard S&P 500 and Vanguard FTSE All-World ETFs. This correlation means these assets tend to move in the same direction, reducing diversification benefits. While correlation can enhance returns during market upswings, it also increases risk during downturns. To optimize the portfolio, consider reducing exposure to overlapping assets and incorporating investments with lower correlation to improve diversification and risk management.

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.

Before optimizing the portfolio, focus on reducing overlapping assets that offer no diversification benefits. Moving along the efficient frontier can help achieve a riskier or more conservative portfolio. A more aggressive approach could involve increasing exposure to high-growth sectors, while a conservative one might include more defensive sectors or asset classes. It's crucial to align any changes with the investor's risk tolerance and financial goals, ensuring a balance between risk and return.

Ongoing product costs Info

  • iShares MSCI India UCITS ETF USD Acc 0.65%
  • Vanguard S&P 500 UCITS Acc 0.07%
  • VanEck Semiconductor UCITS ETF 0.35%
  • Vanguard FTSE All-World UCITS ETF USD Accumulation 0.22%
  • Weighted costs total (per year) 0.25%

The total expense ratio (TER) for the portfolio is 0.25%, which is relatively low, indicating cost-efficient management. Lower costs can significantly impact overall returns, especially over the long term, by minimizing the drag on performance. To maintain cost-effectiveness, it's important to regularly review expense ratios and compare them with similar investment options. Ensuring that the portfolio remains competitive in terms of fees will help maximize net returns over time.

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