A balanced global equity portfolio with a strong North American focus

Report created on Mar 4, 2025

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 primarily composed of two ETFs: Vanguard FTSE All-World UCITS ETF (87.5%) and Vanguard S&P 500 UCITS Acc (12.5%). This composition offers a broad exposure to global equities, with a significant tilt towards the U.S. market. The portfolio's structure aligns with a balanced investment profile, providing a mix of growth and stability. While the global exposure is commendable, consider diversifying further into other asset classes like bonds or real estate to reduce volatility during market downturns.

Growth Info

Historically, the portfolio has shown a robust CAGR of 11.70%, indicating strong growth over time. However, the maximum drawdown of -25.19% highlights potential volatility during market downturns. When compared to a global equity benchmark, the performance is competitive, offering a solid return for the risk taken. It's important to remember that past performance doesn't guarantee future results. Regularly reviewing performance against benchmarks can help ensure the portfolio remains aligned with your investment goals.

Projection Info

The Monte Carlo simulation, using 1,000 iterations, projects a wide range of potential outcomes for the portfolio. While the median projection is a 425.4% increase, the 5th percentile shows a more modest 71.3% gain. This simulation uses historical data to estimate future performance, but it's essential to note that this is not a prediction. It's a tool to understand possible outcomes. Given the high number of positive simulations, the portfolio is well-positioned for future growth, though market conditions can change.

Asset classes Info

  • Stocks
    100%

The portfolio is solely invested in equities, providing exposure to global stock markets. This 100% stock allocation emphasizes growth potential, but it also introduces higher volatility. Compared to a balanced benchmark, this allocation lacks fixed income or alternative assets, which could provide stability during market fluctuations. Consider introducing a small percentage of bonds or other asset classes to enhance diversification and potentially reduce risk.

Sectors Info

  • Technology
    26%
  • Financials
    17%
  • Consumer Discretionary
    11%
  • Health Care
    10%
  • Industrials
    9%
  • Telecommunications
    9%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    3%
  • Utilities
    3%
  • Real Estate
    2%

The sector allocation is diverse, with a notable concentration in Technology (26%) and Financial Services (17%). This distribution aligns closely with global market trends, where tech and finance often dominate. However, the high concentration in technology could lead to increased volatility, especially during interest rate hikes. Balancing sector exposure by gradually increasing allocation to underrepresented sectors like Utilities or Real Estate could provide more stability and reduce sector-specific risks.

Regions Info

  • North America
    71%
  • Europe Developed
    12%
  • Japan
    5%
  • Asia Emerging
    5%
  • Asia Developed
    3%
  • Australasia
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is heavily weighted towards North America (71%), with lesser allocations to Europe (12%) and Asia (13%). This U.S.-centric approach has historically been beneficial, but it may expose the portfolio to region-specific risks. Diversifying further into emerging markets or other regions could enhance global exposure and potentially improve risk-adjusted returns. Comparing this distribution to global benchmarks can help identify any significant over- or under-exposure.

Market capitalization Info

  • Mega-cap
    47%
  • Large-cap
    35%
  • Mid-cap
    17%

The portfolio's market capitalization is predominantly in mega (47%) and big (35%) companies, with minimal exposure to medium (17%) and no small caps. This focus on large-cap stocks provides stability and reduced volatility, as these companies are typically well-established. However, incorporating some small-cap stocks could offer higher growth potential, albeit with increased risk. Balancing market cap exposure can help optimize returns while managing risk effectively.

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 allocation can be optimized using the Efficient Frontier, a concept that aims to achieve the best possible risk-return ratio. By adjusting the weights of the existing assets, it's possible to enhance returns while managing risk effectively. However, this optimization is based solely on the current assets, so diversification into other asset classes isn't considered. Regularly reviewing the portfolio's position on the Efficient Frontier can help maintain an optimal balance.

Ongoing product costs Info

  • Vanguard S&P 500 UCITS Acc 0.07%
  • Vanguard FTSE All-World UCITS ETF USD Accumulation 0.22%
  • Weighted costs total (per year) 0.20%

The portfolio's costs are impressively low, with a total expense ratio (TER) of 0.20%. This low-cost structure supports better long-term performance by minimizing fees that can erode returns over time. Vanguard's reputation for cost-effective investment solutions is evident here. Maintaining a focus on low-cost investments is crucial for maximizing net returns. Regularly reviewing and comparing costs with similar portfolios can ensure continued cost efficiency.

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