Globally diversified equity portfolio with strong emerging tilt and high quality low volatility factor profile
Report created on Apr 29, 2024Risk profile
4/7
Diversification profile
4/5
Positions
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VG Vanguard FTSE All-World UCITS ETF
VGWL - IE00B3RBWM25 55.56% -
VF Vanguard FTSE Emerging Markets UCITS
VFEM - IE00B3VVMM84 44.44%
The structure is refreshingly simple: two broad equity ETFs, one global and one emerging, with a roughly 55/45 split. Everything sits in stocks, with no bonds or alternatives, so growth is clearly the focus. Using only two wide funds keeps things very clean and easy to manage, while still tapping thousands of companies worldwide under the hood. For a balanced-risk label, this is actually an equity‑heavy setup, so the ride can be bumpy even though it is diversified. The key takeaway is that this is a straightforward, “own the world with an extra emerging twist” portfolio that trades complexity for broad coverage and long‑term growth potential.
Growth
Since late 2017, $1,000 grew to about $1,949, a compound annual growth rate (CAGR) of 8.2%. CAGR is like your average speed on a long road trip, smoothing out all the stop‑and‑go. The portfolio lagged both the US market and the global market, mainly because it holds more emerging exposure and less US, which hurt relative returns during a very strong US decade. Max drawdown, the worst peak‑to‑trough fall, was about ‑32%, similar to global markets, showing typical equity‑level stress. The main message: performance has been solid in absolute terms but more conservative versus the roaring US market, with historically “normal” stock‑market downside.
Asset classes
- Stocks 100%
All capital is in stocks, with 0% in bonds, cash, or alternatives. This all‑equity stance is what drives both the attractive projected growth and the sizable drawdowns during stress. Compared with many “balanced” approaches that mix stocks and bonds, this sits firmly on the growth‑oriented side. The upside is simplicity and maximum participation in global economic expansion; the downside is higher sensitivity to market crashes and no built‑in stabilizer from safer assets. A key insight is that risk management here comes from diversification within equities, not from mixing in low‑risk assets. Anyone using a setup like this generally needs a long horizon and the emotional tolerance to sit through large swings.
Sectors
- Technology 26%
- Financials 19%
- Consumer Discretionary 10%
- Industrials 9%
- Telecommunications 8%
- Health Care 7%
- Basic Materials 6%
- Consumer Staples 5%
- Energy 4%
- Utilities 3%
- Real Estate 2%
Sector exposure is quite broad, with technology the largest slice at 26%, followed by financials at 19% and consumer‑related areas and industrials filling a good portion of the rest. This pattern is very similar to global equity benchmarks, which is a strong indicator of healthy diversification. Tech’s leadership means the portfolio will benefit when innovation, software, and semiconductors outperform, but may feel sharper pullbacks when interest rates rise or when growth stocks fall out of favor. Balanced representation in financials, industrials, and defensive sectors helps smooth things somewhat. Overall, the sector mix looks well‑aligned with global standards, which supports long‑run resilience across different parts of the economic cycle.
Regions
- North America 35%
- Asia Emerging 26%
- Asia Developed 15%
- Europe Developed 9%
- Africa/Middle East 5%
- Latin America 4%
- Japan 4%
- Australasia 1%
- Europe Emerging 1%
Geographically, exposure is genuinely global: roughly one‑third in North America, about a quarter in emerging Asia, and solid slices across developed Asia, Europe, and smaller regions. Compared with a typical global index that leans heavily toward the US, this setup meaningfully boosts emerging markets and trims US share. That brings higher growth potential and stronger diversification across currencies and economic regimes, but also more volatility and sensitivity to political and regulatory shifts. This global spread is a real strength: it avoids a single‑country bet and taps many growth engines. The main trade‑off is accepting that some regions can underperform for long stretches, even while the worldwide mix keeps delivering over decades.
Market capitalization
- Mega-cap 51%
- Large-cap 33%
- Mid-cap 14%
- Small-cap 1%
The market‑cap breakdown is dominated by mega‑caps and large‑caps, together over 80% of exposure, with a smaller role for mid‑caps and only a sliver in small‑caps. That mirrors standard global equity indexes, where the biggest companies naturally take the most weight. Large and mega companies typically offer stronger balance sheets, more stable cash flows, and better liquidity, which can soften extreme volatility. The flip side is slightly less exposure to the smallest, most nimble firms that sometimes deliver outsized long‑term gains. The big picture: this is a “core” capitalization profile, leaning on established global leaders, which is helpful for stability but unlikely to behave like a high‑octane small‑cap tilt.
True holdings
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23 Taiwan Semiconductor Manufacturing Co. Ltd. 7.53%
Part of fund(s):- Vanguard FTSE All-World UCITS ETF
- Vanguard FTSE Emerging Markets UCITS
-
NV NVIDIA Corporation 2.34%
Part of fund(s):- Vanguard FTSE All-World UCITS ETF
-
AA Apple Inc 2.18%
Part of fund(s):- Vanguard FTSE All-World UCITS ETF
-
07 Tencent Holdings Ltd 1.76%
Part of fund(s):- Vanguard FTSE Emerging Markets UCITS
-
MS Microsoft Corporation 1.65%
Part of fund(s):- Vanguard FTSE All-World UCITS ETF
-
99 Alibaba Group Holding Ltd 1.40%
Part of fund(s):- Vanguard FTSE Emerging Markets UCITS
-
AM Amazon.com Inc 1.14%
Part of fund(s):- Vanguard FTSE All-World UCITS ETF
-
GO Alphabet Inc Class A 1.03%
Part of fund(s):- Vanguard FTSE All-World UCITS ETF
-
AV Broadcom Inc 0.83%
Part of fund(s):- Vanguard FTSE All-World UCITS ETF
-
GO Alphabet Inc Class C 0.83%
Part of fund(s):- Vanguard FTSE All-World UCITS ETF
- Top 10 total 20.68%
The top look‑through holdings show familiar global giants, with Taiwan Semiconductor, NVIDIA, Apple, Tencent, and Microsoft among the biggest exposures. Taiwan Semiconductor stands out at roughly 7.5% of covered holdings, meaning chip and semiconductor dynamics will noticeably influence results. Several large tech names appear via multiple funds, which quietly increases concentration in mega‑cap technology and platform companies. Because the data only covers ETF top‑10 holdings, true overlap is almost certainly higher underneath. The practical insight is that although the portfolio uses broad index funds, a fair chunk of risk and returns will still be driven by a relatively small group of dominant global firms, especially in chips and US tech.
Factors
Factor exposures are estimated using statistical models based on historical data and measure systematic (market-relative) tilts, not absolute portfolio characteristics. Results may vary depending on the analysis period, data availability, and currency of the underlying assets.
Factor exposure shows notable tilts: high value, high yield, and high low‑volatility, with a mild tilt away from smaller size. Factors are like the underlying “traits” that explain why groups of stocks behave differently over time. A value and yield tilt means more emphasis on cheaper, income‑producing companies and less on expensive, speculative growth names. The strong low‑volatility tilt suggests the basket holds relatively steadier stocks, which historically fall less in crashes but may lag in explosive bull runs. This pattern is quite attractive for someone wanting equity growth with a slightly smoother ride. The one trade‑off: in periods when aggressive growth and small caps dominate, this profile may underperform frothier markets.
Risk contribution
-
Vanguard FTSE All-World UCITS ETF
Weight: 55.56% 51.9% -
Vanguard FTSE Emerging Markets UCITS
Weight: 44.44% 48.1%
Risk contribution shows how much each holding drives overall ups and downs, which can differ from simple weight. Here, the world ETF and the emerging ETF contribute risk almost in line with their allocations: around 52% vs 48% of total volatility. That indicates neither fund is wildly more volatile relative to its size, even though emerging markets are typically choppier. Keeping risk broadly shared like this is healthy, because no single position is secretly dominating behavior. If one ETF had contributed far more risk than its weight, that would invite a rethink of sizing. In this structure, managing overall risk mainly means deciding how much total exposure to emerging markets feels comfortable.
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.
On the risk‑return chart, the current portfolio sits below the efficient frontier. The efficient frontier shows the best possible return for each risk level using only the existing holdings in different weights. The current Sharpe ratio—a measure of return per unit of risk—is 0.45, while the optimal mix of the same two funds reaches around 0.64 with slightly lower risk. That means, historically, a different balance between the world and emerging ETFs would have delivered better risk‑adjusted results without adding new products. The practical takeaway: there’s room to improve efficiency simply by reweighting the two current funds toward an allocation closer to the historical optimal or minimum‑variance blend.
Dividends
- Vanguard FTSE All-World UCITS ETF 0.60%
- Weighted yield (per year) 0.33%
The indicated portfolio yield is modest, around 0.33%, even though the global ETF itself yields closer to 0.6%. This suggests a tilt toward total return rather than income. Dividends can be attractive for those wanting regular cash flow, but reinvesting them is often powerful for compounding over time. In globally diversified equity portfolios, income levels can vary by region and sector, with some markets paying more and others reinvesting profits. The relatively low yield fits a growth‑oriented profile focused on capital appreciation. For someone who doesn’t need current income, this structure works fine; for income‑seekers, it would be more of a growth engine than a paycheck generator.
Ongoing product costs
- Vanguard FTSE Emerging Markets UCITS 0.17%
- Vanguard FTSE All-World UCITS ETF 0.19%
- Weighted costs total (per year) 0.18%
Costs are impressively low, with a blended total expense ratio (TER) of about 0.18%. TER is like an annual membership fee charged by the funds; keeping it low means more of each year’s return stays in your pocket. Over long horizons, even a 0.3%–0.5% difference can add up to thousands of dollars due to compounding. Being this close to rock‑bottom indexing costs is a major strength of the setup and fully in line with best practices in evidence‑based investing. The key message: the fee drag here is minimal, so long‑term performance will largely reflect actual market outcomes rather than being quietly eroded by high product costs.
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