Balanced portfolio with strong US focus and moderate exposure to emerging markets

Report created on Jan 8, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

This portfolio is heavily weighted towards stocks, with 99.92% in equities and a small cash component. The allocation includes three major ETFs: Vanguard S&P 500, Vanguard FTSE Developed Europe ex UK, and iShares Core MSCI Emerging Markets. Compared to a typical balanced portfolio, this one leans significantly towards equity, which can offer higher growth potential but also comes with increased risk. It’s important to understand that while stocks can provide substantial returns, they also expose you to market volatility. Consider whether this equity-heavy composition aligns with your risk tolerance and investment goals.

Growth Info

Historically, this portfolio has delivered an impressive Compound Annual Growth Rate (CAGR) of 12.49%, indicating strong past performance. However, the maximum drawdown of -33.21% highlights the potential for significant short-term losses during market downturns. While past performance can offer insights, it’s not a guarantee of future results. The portfolio's ability to recover from drawdowns and achieve growth is noteworthy, but it’s crucial to ensure your risk tolerance can accommodate such fluctuations. Maintaining a long-term perspective may help weather these periods of volatility.

Projection Info

Using Monte Carlo simulations, this portfolio's future performance was projected with a median return of 242.25% over the investment horizon. A Monte Carlo simulation uses historical data to estimate a range of possible outcomes, providing a probabilistic view of future returns. The 5th percentile indicates a potential minimum return of 5.97%, while the 67th percentile suggests a possible return of 364.79%. These projections highlight the potential for both growth and risk. Keep in mind that simulations are based on historical data and assumptions, which may not fully capture future market conditions.

Asset classes Info

  • Stocks
    100%

The portfolio is almost entirely composed of stocks, with a negligible amount in cash. This singular focus on equities suggests a high potential for growth but also increased exposure to market fluctuations. Compared to a more diversified portfolio, which might include bonds or other asset classes, this allocation may result in higher volatility. Diversifying into other asset classes could help stabilize returns and reduce risk. Consider whether the current asset class distribution aligns with your financial objectives and risk appetite.

Sectors Info

  • Technology
    26%
  • Financials
    16%
  • Consumer Discretionary
    11%
  • Health Care
    11%
  • Industrials
    10%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Basic Materials
    4%
  • Energy
    3%
  • Utilities
    3%
  • Real Estate
    2%

Sector-wise, the portfolio is heavily concentrated in Technology (25.97%) and Financial Services (16.40%). While these sectors have historically driven significant returns, they can also exhibit volatility, especially during economic shifts. For instance, tech-heavy allocations might suffer during interest rate hikes. The presence of other sectors like Consumer Cyclicals and Healthcare provides some balance, but the concentration in a few sectors could limit diversification. Consider reviewing sector weights to ensure they align with your risk tolerance and market outlook.

Regions Info

  • North America
    59%
  • Europe Developed
    22%
  • Asia Emerging
    10%
  • Asia Developed
    5%
  • Africa/Middle East
    2%
  • Latin America
    1%
  • Europe Emerging
    1%

Geographically, the portfolio is predominantly focused on North America (59.32%), with moderate exposure to Europe Developed and Asia Emerging. This allocation aligns with many global benchmarks, reflecting a strong emphasis on US markets. However, it may miss opportunities in underrepresented regions like Latin America or Africa/Middle East. Geographic diversification can help mitigate country-specific risks and capture growth from various markets. Assess whether the current geographic exposure meets your diversification goals and consider adjusting if necessary.

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 risk-return profile could potentially be optimized using the Efficient Frontier, a concept that helps identify the best possible risk-return ratio. By adjusting allocations among the existing assets, it's possible to achieve a more efficient balance. However, this optimization focuses solely on the current holdings and doesn't account for external factors or additional diversification. Consider exploring potential allocation changes to enhance efficiency, but remember that optimization doesn't guarantee diversification or address other investment goals.

Ongoing product costs Info

  • iShares Core MSCI Emerging Markets IMI UCITS 0.18%
  • Vanguard FTSE Developed Europe ex UK UCITS 0.10%
  • Vanguard S&P 500 UCITS Acc 0.07%
  • Weighted costs total (per year) 0.10%

The portfolio boasts impressively low costs, with a Total Expense Ratio (TER) of 0.1%. Low fees can significantly enhance long-term returns by minimizing the drag on performance. Compared to higher-cost investment options, this portfolio's cost efficiency supports better overall growth potential. Maintaining low costs is crucial for optimizing returns, especially over extended periods. Continue monitoring fee structures to ensure they remain competitive and consider replacing any higher-cost components with more cost-effective alternatives without sacrificing quality.

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