A balanced global investment strategy with a focus on diversification and moderate risk

Report created on May 5, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification

Positions

The portfolio is well-structured, comprising 40% bonds and 60% stocks, which is indicative of a balanced approach to risk and return. The inclusion of global bond and equity ETFs, such as the Vanguard Global Aggregate Bond UCITS ETF and the Vanguard S&P 500 UCITS, alongside emerging market and European equities, highlights a strategic emphasis on diversification across asset classes, sectors, and geographies. This diversified approach is designed to mitigate risk while capturing growth opportunities in various markets.

Growth Info

With a Compound Annual Growth Rate (CAGR) of 7.04% and a maximum drawdown of -16.42%, the portfolio demonstrates a solid balance between growth and risk management. The days contributing to 90% of returns being limited to 8.0 days suggests that the portfolio's performance is not overly reliant on outlier events, which is a positive indicator of consistent performance. The historical performance, when compared to the portfolio's moderate risk score of 4 out of 7, suggests that the portfolio has been managed effectively to achieve a commendable risk-adjusted return.

Projection Info

Monte Carlo simulations, based on 1,000 iterations, project a wide range of outcomes with a median potential growth of 141.3%. The simulation's key percentiles indicate variability in potential outcomes, yet with 85.2% of simulations showing positive returns, there's a strong likelihood of future gains. However, it's important to remember that these projections are based on past data and assumptions, which cannot guarantee future results.

Asset classes Info

  • Stocks
    60%
  • Bonds
    40%

The portfolio's asset allocation—60% in stocks and 40% in bonds—supports a balanced risk profile. This allocation aligns with the portfolio's risk classification and diversification score, aiming to provide growth through equities while using bonds to reduce volatility. In the context of a balanced investor's profile, this mix helps in achieving long-term financial goals while managing risk, especially in fluctuating markets.

Sectors Info

  • Technology
    15%
  • Financials
    12%
  • Consumer Discretionary
    7%
  • Industrials
    6%
  • Telecommunications
    5%
  • Health Care
    4%
  • Consumer Staples
    3%
  • Basic Materials
    3%
  • Energy
    2%
  • Utilities
    2%
  • Real Estate
    1%

Sector allocation reveals a well-rounded exposure, with significant positions in technology, financial services, and consumer cyclicals. This sector distribution suggests a growth-oriented strategy while maintaining a balance across defensive sectors like healthcare and consumer defensive. The emphasis on technology and financial services, sectors known for their growth potential, is balanced by investments in more stable sectors, mitigating sector-specific risks.

Regions Info

  • North America
    25%
  • Asia Emerging
    13%
  • Europe Developed
    10%
  • Asia Developed
    6%
  • Africa/Middle East
    3%
  • Latin America
    2%
  • Europe Emerging
    1%

Geographic allocation emphasizes North America, Asia Emerging, and Europe Developed markets, providing a good mix of developed and emerging market exposure. This geographical spread is crucial for tapping into different economic cycles, reducing region-specific risks, and capitalizing on growth opportunities globally. However, the portfolio could benefit from a slight increase in exposure to underrepresented regions to enhance diversification further.

Market capitalization Info

  • Mega-cap
    32%
  • Large-cap
    18%
  • Mid-cap
    8%
  • Small-cap
    1%

The market capitalization breakdown, with a focus on mega and big cap stocks, underscores a preference for stability and lower volatility associated with larger, well-established companies. While this approach is prudent, especially in volatile market conditions, incorporating a slightly higher proportion of medium to small-cap stocks could offer higher growth potential, albeit with increased risk.

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 expected return is well positioned, but portfolio optimization suggests a potential to achieve an expected return of 12.65% at the same risk level. This indicates room for improvement in asset allocation to enhance returns without increasing risk. Regularly reviewing and adjusting the portfolio to maintain an optimal balance between risk and return is advisable.

Ongoing product costs Info

  • iShares VII PLC - iShares Core EURO STOXX 50 ETF EUR Acc 0.10%
  • iShares Core MSCI Emerging Markets IMI UCITS 0.18%
  • Vanguard Global Aggregate Bond UCITS ETF GBP Hedged Accumulation 0.10%
  • Vanguard S&P 500 UCITS Acc 0.07%
  • Weighted costs total (per year) 0.11%

With an overall Total Expense Ratio (TER) of 0.11%, the portfolio benefits from low costs, which is commendable. Lower costs directly translate to higher net returns over time, making this a significant strength of the portfolio. It's crucial to maintain this focus on cost efficiency while exploring opportunities to optimize returns further.

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