A balanced portfolio with global exposure and a focus on quality and momentum ETFs

Report created on Dec 29, 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 largely composed of equity ETFs, with a focus on MSCI World Momentum and Quality, alongside S&P 500 exposure. These ETFs make up a significant portion of the portfolio, indicating a preference for growth and stability. The inclusion of gold provides a hedge against market volatility. Compared to typical balanced portfolios, this one leans heavily towards equities, which may increase potential returns but also risk. To enhance stability, consider adding other asset classes like bonds, which can help cushion against equity market fluctuations.

Growth Info

Historically, the portfolio has delivered a strong Compound Annual Growth Rate (CAGR) of 12.05%, significantly outperforming many benchmarks. However, it also experienced a maximum drawdown of -24.84%, highlighting its vulnerability during market downturns. This performance suggests that while the portfolio has capitalized on market upswings, it remains susceptible to volatility. To mitigate this, diversifying into less correlated assets could reduce drawdowns. Remember, past performance does not guarantee future results, but it provides a useful context for potential risk and return.

Projection Info

Monte Carlo simulations, which use historical data to predict future outcomes, suggest a wide range of potential returns. The portfolio's 5th percentile predicts an 18.85% return, while the median is 305.09%, and the 67th percentile is 432.37%. This indicates a high probability of positive returns, with 970 out of 1,000 simulations showing gains. However, it's important to note that simulations are based on past data and assumptions, and actual future returns can vary. Regularly reviewing and adjusting your portfolio can help manage expectations and align with changing market conditions.

Asset classes Info

  • Stocks
    92%
  • Other
    8%

The portfolio is heavily weighted towards stocks at 91.67%, with a small allocation to other assets such as gold. This high equity exposure increases potential returns but also risk. Compared to typical balanced portfolios, which often include bonds, this allocation is more aggressive. While the gold allocation provides some diversification, it might not be sufficient to offset equity volatility. Consider incorporating more fixed-income assets to balance risk and return, especially if market conditions become unfavorable for equities.

Sectors Info

  • Technology
    21%
  • Financials
    18%
  • Industrials
    9%
  • Health Care
    9%
  • Consumer Discretionary
    9%
  • Telecommunications
    7%
  • Consumer Staples
    6%
  • Energy
    4%
  • Utilities
    3%
  • Basic Materials
    3%
  • Real Estate
    2%

Sector-wise, the portfolio is concentrated in Technology and Financial Services, making up nearly 40% of the total. This focus could lead to higher volatility, especially during sector-specific downturns. A more diversified sector allocation could reduce risk and improve stability. For instance, increasing exposure to Consumer Defensive or Utilities could provide more consistent returns during economic downturns. The current sector composition aligns with growth trends, but diversification can protect against unexpected market shifts.

Regions Info

  • North America
    57%
  • Asia Emerging
    20%
  • Europe Developed
    9%
  • Japan
    4%
  • Australasia
    1%
  • Asia Developed
    1%

Geographically, the portfolio is heavily weighted towards North America, with significant exposure to emerging Asia. While this provides access to growth markets, it also increases vulnerability to regional economic and political risks. Compared to global benchmarks, this portfolio is underweight in Europe and Japan. To enhance diversification, consider increasing allocations to these regions, which may offer stability and growth opportunities. Balancing geographic exposure can help mitigate risks associated with regional downturns.

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 could benefit from optimization using the Efficient Frontier, which seeks the best possible risk-return ratio. Currently, the allocation is focused on growth, but slight changes could enhance efficiency. By adjusting weights among existing assets, you may achieve a better balance between risk and return. This does not necessarily mean adding new assets but reallocating among current ones. Such optimization can improve performance without significantly altering the portfolio's overall strategy.

Ongoing product costs Info

  • Franklin FTSE India UCITS ETF GBP 0.19%
  • iShares IV Public Limited Company - iShares MSCI India UCITS ETF 0.65%
  • iShares VI Public Limited Company - iShares Edge MSCI World Minimum Volatility UCITS ETF 0.30%
  • iShares Physical Gold ETC 0.25%
  • iShares MSCI World Small Cap UCITS ETF USD (Acc) 0.35%
  • Xtrackers MSCI World Momentum UCITS ETF 0.25%
  • Xtrackers MSCI World Quality UCITS ETF 0.25%
  • Xtrackers MSCI World Value UCITS ETF 0.25%
  • Xtrackers (IE) Public Limited Company - Xtrackers S&P 500 UCITS ETF 0.06%
  • Weighted costs total (per year) 0.28%

The portfolio's Total Expense Ratio (TER) is 0.28%, which is competitive and supports better long-term performance. Lower costs mean more of your returns stay in your pocket. However, the iShares MSCI India ETF has a relatively high cost at 0.65%. Evaluating whether this aligns with your investment goals is crucial. Consider if lower-cost alternatives might offer similar exposure. Keeping costs low is a key component of maximizing net returns over time.

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