A moderately diversified portfolio with a strong focus on North American equities

Report created on Mar 28, 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 is composed entirely of equities, with a significant portion allocated to ETFs, particularly the Invesco S&P 500 Equal Weight Index ETF, which constitutes 28.5% of the portfolio. This structure leans heavily towards U.S. equities, complemented by a mix of large-cap and small-cap stocks. This composition provides a solid foundation for growth, but the lack of fixed-income assets may increase volatility. To enhance stability, consider integrating a small percentage of bonds or other low-risk assets, which could help cushion against market downturns.

Growth Info

Historically, the portfolio has delivered a robust CAGR of 13.66%, outperforming many benchmarks. This indicates strong growth potential, although it's essential to note that past performance doesn't guarantee future results. The maximum drawdown of -15.06% reflects the portfolio's exposure to market fluctuations. To mitigate potential losses, consider strategies such as dollar-cost averaging or maintaining a cash reserve to capitalize on buying opportunities during downturns.

Projection Info

The Monte Carlo simulation, which uses historical data to forecast future outcomes, suggests a median return of 250.8% over the investment horizon. While 950 out of 1,000 simulations show positive returns, it's crucial to remember that these projections are not certainties. The 5th percentile outcome of 0.5% highlights the inherent risks in equity-heavy portfolios. Diversifying across asset classes or increasing geographic exposure could provide a buffer against adverse scenarios.

Asset classes Info

  • Stocks
    100%

The portfolio's exclusive focus on equities limits diversification benefits. With 100% in stocks, it lacks the risk mitigation that bonds or alternative investments can provide. This allocation may lead to higher volatility, especially in turbulent markets. To align with a balanced risk profile, consider incorporating non-equity asset classes. This could involve a modest allocation to bonds or real assets, which can offer stability and income, enhancing the portfolio's resilience.

Sectors Info

  • Technology
    27%
  • Financials
    17%
  • Health Care
    11%
  • Industrials
    11%
  • Consumer Discretionary
    9%
  • Consumer Staples
    5%
  • Real Estate
    4%
  • Energy
    4%
  • Telecommunications
    4%
  • Basic Materials
    4%
  • Utilities
    3%

Sector-wise, the portfolio is tech-heavy, with 27% in technology, potentially increasing volatility, especially during periods of interest rate hikes. Financial services and healthcare also comprise significant portions. This sectoral concentration may expose the portfolio to sector-specific risks. To achieve better balance, consider diversifying into underrepresented sectors such as utilities or consumer staples, which can provide defensive characteristics and reduce overall portfolio risk.

Regions Info

  • North America
    78%
  • Europe Developed
    17%
  • Japan
    2%
  • Australasia
    1%
  • Asia Developed
    1%

Geographically, the portfolio is heavily skewed towards North America, which accounts for 78% of the allocation. This concentration may limit exposure to global growth opportunities and increase vulnerability to U.S. economic fluctuations. Increasing exposure to emerging markets or underrepresented regions like Europe and Asia could enhance diversification. This strategy might capture growth in diverse economic environments, reducing reliance on any single geographic area.

Market capitalization Info

  • Mega-cap
    30%
  • Large-cap
    25%
  • Mid-cap
    23%
  • Small-cap
    14%
  • Micro-cap
    8%

The portfolio's market capitalization distribution is well-balanced, with 30% in mega caps and 25% in big caps, providing stability. However, the 14% allocation to small caps suggests a tilt towards growth-oriented investments. While small caps can offer higher returns, they also carry higher risk. To balance risk and reward, consider adjusting the allocation to include more medium and large-cap stocks. This could provide a smoother return profile over time.

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 current portfolio could be optimized along the Efficient Frontier to achieve a better risk-return ratio. The Efficient Frontier represents the set of portfolios that offer the highest expected return for a given level of risk. By reallocating among existing assets, the portfolio could potentially achieve an expected return of 21.71% with a risk level of 14.29%. This optimization focuses on maximizing returns without increasing overall risk, enhancing the portfolio's efficiency.

Ongoing product costs Info

  • iShares MSCI Europe ESG Enhanced UCITS ETF EUR Acc 0.12%
  • iShares MSCI World Small Cap UCITS ETF USD (Acc) 0.35%
  • Invesco S&P SmallCap 600 UCITS ETF 0.14%
  • Invesco S&P 500 Equal Weight Index ETF Acc EUR 0.20%
  • SPDR S&P 500 ESG Leaders UCITS ETF 0.10%
  • VanEck Sustainable World Equal Weight UCITS ETF 0.20%
  • VanEck Morningstar Developed Markets Dividend Leaders UCITS ETF 0.38%
  • Weighted costs total (per year) 0.18%

The portfolio's Total Expense Ratio (TER) is a low 0.18%, which is commendable. Low costs are crucial for maximizing net returns over the long term. It's important to maintain this cost efficiency to enhance the portfolio's performance. Regularly review and compare ETF fees to ensure they remain competitive. This proactive approach can help sustain the portfolio's cost advantage, contributing to better overall investment outcomes.

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