A balanced portfolio with strong US and European equity focus and low cost

Report created on Jan 7, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio consists of two ETFs: Vanguard FTSE Developed Europe ex UK UCITS and Vanguard S&P 500 UCITS Acc, each making up 50% of the portfolio. This allocation provides exposure to developed European and US markets, aligning with a typical balanced portfolio structure. A common benchmark might include a mix of equities and bonds, but this portfolio is heavily equity-focused. This composition supports growth potential but may increase volatility compared to more diversified portfolios that include bonds or alternative assets. Consider adding other asset classes to enhance diversification and potentially reduce risk, aligning more closely with a balanced investment profile.

Growth Info

The portfolio's historic performance shows a Compound Annual Growth Rate (CAGR) of 12.38%, indicating robust growth over the analyzed period. Compared to common benchmarks, this performance is commendable, especially given the low Total Expense Ratio (TER) of 0.08%. However, the maximum drawdown of -33.46% reflects significant risk during downturns. Historical performance is insightful but not a guarantee of future results. It's essential to maintain a long-term perspective and consider potential market fluctuations. Regularly reviewing performance against benchmarks can help ensure the portfolio remains aligned with your investment goals.

Projection Info

Using Monte Carlo simulations, the portfolio's future performance was projected under various market conditions. With 1,000 simulations, the median outcome was a 391.29% return, while the 5th percentile showed a 63.03% return, indicating a wide range of potential outcomes. Monte Carlo simulations use historical data to model different scenarios, but they cannot predict future events with certainty. The high number of positive simulations (992 out of 1,000) suggests a favorable outlook, but it's crucial to remain aware of the inherent uncertainties. Regularly reassessing projections can help manage expectations and inform strategic adjustments.

Asset classes Info

  • Stocks
    100%

The portfolio is almost entirely composed of stocks, with negligible exposure to other asset classes. This allocation provides significant growth potential but lacks the diversification benefits that bonds or alternative investments might offer. Benchmarks for balanced portfolios typically include a mix of equities and fixed-income assets to manage risk. While the equity focus aligns with growth objectives, introducing other asset classes could enhance stability and reduce volatility. Consider gradually incorporating bonds or other diversifying assets to align more closely with balanced portfolio norms and manage risk effectively.

Sectors Info

  • Technology
    22%
  • Financials
    17%
  • Health Care
    14%
  • Industrials
    13%
  • Consumer Discretionary
    10%
  • Consumer Staples
    7%
  • Telecommunications
    6%
  • Basic Materials
    4%
  • Utilities
    3%
  • Energy
    3%
  • Real Estate
    2%

The sector allocation shows a notable concentration in Technology (21.55%), Financial Services (16.64%), and Healthcare (13.59%). This composition aligns well with common benchmarks, indicating a diversified approach across major sectors. However, the tech-heavy allocation may lead to increased volatility, especially during periods of rising interest rates. Balancing sector weights can help mitigate sector-specific risks and improve resilience. Regularly reviewing sector trends and adjusting allocations accordingly can optimize the portfolio's performance and ensure alignment with broader market movements.

Regions Info

  • North America
    50%
  • Europe Developed
    50%

The portfolio's geographic allocation is split between North America (50.07%) and Europe Developed (49.57%), with minimal exposure to other regions. This distribution provides strong exposure to mature markets but limits diversification opportunities in emerging markets. Common benchmarks often include more geographic diversity to capture growth potential across different regions. Expanding geographic exposure could enhance diversification and reduce region-specific risks. Consider exploring opportunities in underrepresented areas to balance the portfolio's geographic composition and capitalize on global growth trends.

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 structure can be optimized using the Efficient Frontier, which identifies the best possible risk-return ratio. This optimization focuses on reallocating existing assets to achieve maximum efficiency. While the current allocation is heavily equity-focused, exploring different weights within existing assets could improve the risk-return profile. Regularly reviewing and adjusting allocations can help maintain an optimal balance, ensuring the portfolio aligns with changing market conditions and personal investment objectives.

Ongoing product costs Info

  • Vanguard FTSE Developed Europe ex UK UCITS 0.10%
  • Vanguard S&P 500 UCITS Acc 0.07%
  • Weighted costs total (per year) 0.08%

The portfolio's costs are impressively low, with a Total Expense Ratio (TER) of just 0.08%. This efficient cost structure supports better long-term performance by minimizing the drag on returns. Low costs are a significant advantage, especially when compounded over time. It's essential to regularly review and compare these costs to ensure they remain competitive. Maintaining a focus on cost-effective investments can enhance net returns and contribute to achieving financial goals more efficiently.

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