Highly Diversified Cautious Portfolio with Balanced Global Exposure and Moderate Costs

Report created on Jul 22, 2024

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

Positions

The portfolio is composed of a variety of ETFs, with a significant allocation to global aggregate bonds and North American equities. This mix provides a balanced approach, combining the stability of bonds with the growth potential of equities. A cautious risk classification reflects a strategy focused on preserving capital while still seeking modest growth. The diversification score is excellent, indicating a well-spread risk across different asset classes and regions. This composition is suitable for those who value stability and want to avoid the volatility of a more aggressive portfolio.

Growth Info

Historically, the portfolio has shown a compound annual growth rate (CAGR) of 8.0%, which is respectable for a cautious profile. The maximum drawdown of -25.42% suggests that the portfolio can experience significant dips during adverse market conditions. However, the fact that only 20 days account for 90% of returns highlights the importance of staying invested during volatile periods. This performance indicates that while the portfolio is designed for caution, it can still capture growth opportunities, albeit with some risk during market downturns.

Projection Info

A Monte Carlo simulation, which uses random sampling to predict future outcomes, shows promising results for the portfolio. With 1,000 simulations, the median outcome suggests a potential 167.04% increase in portfolio value, while the 67th percentile projects an even higher return of 250.99%. Notably, 940 out of 1,000 simulations resulted in positive returns, with an average annualized return of 8.73%. This forward-looking analysis underscores the portfolio's potential to achieve its cautious growth objectives while maintaining a level of risk consistent with the investor's profile.

Asset classes Info

  • Stocks
    70%
  • Bonds
    30%

The portfolio's asset class allocation is primarily split between stocks (approximately 70%) and bonds (around 30%). This allocation aligns with a cautious investment strategy, balancing growth and income. Stocks provide the potential for capital appreciation, while bonds offer stability and income. The small allocation to other asset classes suggests a focus on core investments. This structure is suitable for investors who prefer a conservative approach, seeking to mitigate risk while capturing some upside potential from equity markets.

Sectors Info

  • Technology
    15%
  • Financials
    12%
  • Industrials
    8%
  • Consumer Discretionary
    8%
  • Health Care
    7%
  • Telecommunications
    5%
  • Consumer Staples
    4%
  • Basic Materials
    3%
  • Energy
    3%
  • Utilities
    2%
  • Real Estate
    2%

Sector allocation within the portfolio is diverse, with technology and financial services leading at 15.04% and 12.33%, respectively. This diversification across sectors helps reduce the risk of sector-specific downturns impacting the entire portfolio. The presence of consumer cyclicals, healthcare, and communication services further enhances the portfolio's resilience against market fluctuations. This sector spread is beneficial for those looking to maintain stability while still participating in various growth opportunities across different industries.

Regions Info

  • North America
    34%
  • Europe Developed
    13%
  • Asien Schwellenländer
    9%
  • Asien
    4%
  • Japan
    4%
  • Afrika/Mittlerer Osten
    2%
  • Australasia
    2%
  • Latin America
    1%

Geographically, the portfolio is weighted towards North America (34.46%) and developed Europe (13.27%), with additional exposure to Asia and other regions. This global allocation provides a broad market reach, reducing the risk associated with any single region's economic performance. The exposure to emerging markets adds a growth component, albeit with higher volatility. This geographic mix is ideal for investors seeking to benefit from global economic trends while maintaining a cautious stance by avoiding over-concentration in any single area.

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 is well-positioned on the efficient frontier, indicating an optimal balance between risk and return for its cautious profile. While this suggests the portfolio is efficient, there is potential to adjust the risk level to better align with personal preferences. The efficient frontier represents the set of portfolios that offer the highest expected return for a given level of risk. Although the current portfolio is efficient, exploring different risk levels could uncover opportunities for enhanced returns without significantly increasing risk exposure.

Dividends Info

  • Vanguard FTSE Emerging Markets UCITS 2.30%
  • Vanguard FTSE Developed Asia Pacific ex Japan UCITS 2.60%
  • Vanguard FTSE Developed Europe UCITS 2.60%
  • Vanguard FTSE Japan UCITS 1.70%
  • Vanguard FTSE North America UCITS 0.20%
  • Weighted yield (per year) 0.85%

The portfolio's dividend yield stands at 0.85%, with contributions from various ETFs, such as the Vanguard FTSE Emerging Markets UCITS at 2.3% and the Vanguard FTSE Developed Europe UCITS at 2.6%. While not the primary focus, dividends provide a modest income stream, enhancing total returns over time. This yield is suitable for cautious investors who appreciate a steady income to complement capital growth. The reinvestment of dividends can also contribute to compounding returns, further supporting long-term investment goals.

Ongoing product costs Info

  • iShares MSCI World Small Cap UCITS ETF USD (Acc) 0.35%
  • Vanguard Global Aggregate Bond UCITS ETF EUR Hedged Accumulation 0.10%
  • Vanguard FTSE Emerging Markets UCITS 0.22%
  • Vanguard FTSE Developed Asia Pacific ex Japan UCITS 0.15%
  • Vanguard FTSE Developed Europe UCITS 0.10%
  • Vanguard FTSE Japan UCITS 0.15%
  • Vanguard FTSE North America UCITS 0.10%
  • Weighted costs total (per year) 0.14%

The portfolio's total expense ratio (TER) is 0.14%, indicating low costs associated with managing the investments. This is crucial for maximizing net returns, as high fees can erode gains over time. The low-cost structure is achieved through the use of ETFs, which generally have lower fees compared to actively managed funds. This cost efficiency aligns with the cautious investor's goal of preserving capital and achieving growth without incurring significant expenses. Keeping costs low is essential for optimizing long-term performance.

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