Balanced Portfolio with Broad Diversification and Moderate Risk Suitable for Growth-Oriented Investors

Report created on Nov 15, 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 well-structured, consisting of four ETFs with a focus on global equity markets. The Vanguard FTSE All-World UCITS ETF holds the largest share at 50%, providing broad exposure to global markets. The iShares MSCI World Small Cap UCITS ETF contributes 20%, adding a tilt towards smaller companies. The remaining 30% is split between Vanguard FTSE Developed Europe and Emerging Markets ETFs, offering regional diversification. This composition reflects a balanced investment strategy, aiming to capture growth opportunities across various regions and market capitalizations.

Growth Info

Historically, the portfolio has shown strong performance with a compound annual growth rate (CAGR) of 10.61%. Despite experiencing a maximum drawdown of -27.82%, it has demonstrated resilience and recovery potential. Notably, just 22 days account for 90% of the returns, indicating the importance of staying invested for long-term gains. This performance suggests that the portfolio has effectively navigated market volatility, delivering impressive returns over time. Investors should remain patient and focused on long-term objectives to benefit from the portfolio's growth potential.

Projection Info

Using a Monte-Carlo simulation, which models potential future outcomes based on historical data, the portfolio's projected performance is promising. With 1,000 simulations, 956 resulted in positive returns, indicating a high probability of future growth. The median projection shows a potential increase of 228.73%, with annualized returns averaging 10.33%. These projections suggest that the portfolio is well-positioned to continue delivering solid returns, although investors should remain aware of inherent market risks. Diversification and consistent contributions can further enhance the portfolio's future performance.

Asset classes Info

  • Stocks
    100%

The portfolio is predominantly invested in stocks, comprising 99.74% of the asset allocation. This heavy equity focus aligns with a growth-oriented strategy, aiming to capitalize on potential market upsides. While stocks offer higher returns, they also come with increased volatility. The small cash and other asset allocations provide minimal diversification outside of equities. Investors seeking to reduce risk may consider incorporating more bonds or alternative asset classes. However, the current allocation is suitable for those comfortable with equity market fluctuations and seeking long-term growth.

Sectors Info

  • Technology
    19%
  • Financials
    17%
  • Industrials
    13%
  • Consumer Discretionary
    12%
  • Health Care
    10%
  • Telecommunications
    7%
  • Consumer Staples
    6%
  • Basic Materials
    5%
  • Energy
    4%
  • Real Estate
    3%
  • Utilities
    3%

Sector allocation is well-diversified across key industries, with technology (19.15%) and financial services (17.40%) leading the way. This balance provides exposure to both high-growth and stable sectors. Industrials and consumer cyclicals further diversify the portfolio, while healthcare and communication services offer defensive characteristics. This sector mix aims to capture various economic cycles and market trends. Investors should periodically review sector allocations to ensure alignment with economic outlooks and personal risk preferences, maintaining a diversified approach to mitigate sector-specific risks.

Regions Info

  • North America
    46%
  • Europe Developed
    25%
  • Asia Emerging
    12%
  • Japan
    5%
  • Asia Developed
    5%
  • Africa/Middle East
    2%
  • Latin America
    2%
  • Australasia
    2%

Geographically, the portfolio is diversified across multiple regions, with significant exposure to North America (45.84%) and developed Europe (25.36%). This allocation provides stability from established markets while capturing growth from emerging regions like Asia (17.24%). The inclusion of Japan and other developed Asian markets adds further diversification. This geographic spread aims to balance risk and reward by tapping into both mature and developing economies. Investors should continue monitoring regional economic developments and geopolitical risks to ensure the portfolio remains well-positioned globally.

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.

Portfolio optimization suggests that a more efficient portfolio could achieve an expected return of 12.77% with the same risk level. The efficient frontier concept illustrates the trade-off between risk and return, aiming for the highest possible return for a given risk level. The current portfolio, while strong, may not be fully optimized according to these principles. Investors should consider rebalancing or adjusting allocations to enhance returns while maintaining their risk profile. Regularly evaluating portfolio efficiency can lead to improved investment outcomes.

Dividends Info

  • Vanguard FTSE Developed Europe UCITS 3.10%
  • Vanguard FTSE Emerging Markets UCITS 2.40%
  • Vanguard FTSE All-World UCITS 1.40%
  • Weighted yield (per year) 1.52%

The portfolio offers a modest dividend yield of 1.52%, with contributions from all included ETFs. The Vanguard FTSE Developed Europe UCITS ETF provides the highest yield at 3.1%, followed by the Vanguard FTSE Emerging Markets UCITS at 2.4%. These dividends can provide a steady income stream, albeit limited, which may appeal to investors seeking both growth and income. However, the primary focus remains on capital appreciation. Investors looking for higher income may consider increasing allocations to higher-yielding assets, although this could impact growth potential.

Ongoing product costs Info

  • Vanguard FTSE Developed Europe UCITS 0.10%
  • Vanguard FTSE Emerging Markets UCITS 0.22%
  • Vanguard FTSE All-World UCITS 0.22%
  • iShares MSCI World Small Cap UCITS ETF USD (Acc) 0.35%
  • Weighted costs total (per year) 0.23%

The portfolio's total expense ratio (TER) is 0.23%, reflecting a cost-effective investment strategy. With low fees from the Vanguard and iShares ETFs, investors can maximize net returns over time. Keeping costs low is crucial for long-term investment success, as high fees can erode returns. This cost structure aligns with best practices for passive investing, allowing investors to benefit from market performance without excessive expenses. Regularly reviewing and comparing fund fees ensures that the portfolio remains competitive and efficient in achieving investment goals.

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