Balanced and Highly Diversified Portfolio with Moderate Risk and Strong North American Focus

Report created on May 30, 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 mix of ETFs, with a significant 60% allocation to Vanguard FTSE North America UCITS ETF. This highlights a strong emphasis on North American markets, complemented by smaller allocations to European, Japanese, and emerging markets ETFs. The inclusion of bond ETFs, such as the iShares Euro Government Bond 0-1yr UCITS ETF, adds a conservative touch to the portfolio. This balanced composition suggests a strategy aimed at capturing growth opportunities while managing risk through diversification. A well-rounded approach like this can offer stability and potential for steady growth over time.

Growth Info

Historically, the portfolio has shown a commendable performance with a compound annual growth rate (CAGR) of 12.85%. However, it has also experienced a maximum drawdown of -31.89%, indicating periods of significant volatility. This performance pattern suggests that while the portfolio has the potential for substantial returns, it is not immune to market downturns. Understanding these past trends is crucial for setting realistic expectations and preparing for future market fluctuations. To mitigate potential losses, it's important to maintain a diversified approach and regularly review the portfolio's alignment with long-term goals.

Projection Info

Using a Monte Carlo simulation, which involves running numerous scenarios to predict future outcomes, the portfolio shows a median potential growth of 142.7% over a hypothetical initial investment. The simulations indicate a wide range of possible outcomes, with the majority being positive. This suggests that the portfolio is positioned to potentially achieve moderate growth, though there remains a possibility of negative returns. Such forward-looking analysis is useful for understanding the likelihood of various outcomes and aids in making informed decisions about potential adjustments to align with risk tolerance and investment objectives.

Asset classes Info

  • Stocks
    90%
  • Bonds
    6%
  • Cash
    4%

The portfolio is predominantly allocated to stocks, making up approximately 89.85% of the total, while bonds account for about 5.89%. This indicates a strong preference for equities, suggesting a focus on growth. The small allocation to bonds provides some level of income and stability, albeit limited. This asset class distribution is typical for investors seeking capital appreciation but willing to accept some volatility. To enhance stability, consider gradually increasing bond exposure, especially if nearing retirement or requiring more predictable income streams. Maintaining a balanced approach is crucial to achieving desired financial outcomes.

Sectors Info

  • Technology
    24%
  • Financials
    15%
  • Consumer Discretionary
    10%
  • Industrials
    9%
  • Health Care
    9%
  • Telecommunications
    7%
  • Consumer Staples
    5%
  • Energy
    3%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    2%

Sector-wise, the portfolio is heavily weighted towards Technology (24.37%) and Financial Services (14.54%), with notable allocations in Consumer Cyclicals and Industrials. This indicates a focus on sectors with potential for growth and innovation. While this allocation can drive returns, it also exposes the portfolio to sector-specific risks. Diversifying further across sectors could help mitigate these risks and provide more balanced exposure. Regularly reviewing sector performance and adjusting allocations can ensure alignment with evolving market conditions and personal investment goals, fostering a resilient and adaptable investment strategy.

Regions Info

  • North America
    60%
  • Europe Developed
    15%
  • Japan
    6%
  • Australasia
    3%
  • Asia Developed
    3%
  • Asia Emerging
    3%
  • Latin America
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is heavily invested in North America (59.51%), with lesser exposure to Europe, Japan, and emerging markets. This focus on North America suggests confidence in the region's economic prospects but also exposes the portfolio to regional risks. Diversifying geographically can help manage these risks and capture growth opportunities in other parts of the world. By considering a more balanced geographic allocation, the portfolio can potentially enhance its resilience and tap into diverse growth drivers. Regularly reassessing geographic exposure is key to maintaining a well-rounded investment approach.

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 optimization chart suggests that there is room for improvement by moving along the efficient frontier. By adjusting the asset allocation, one can achieve a more optimized balance between risk and return. For those seeking a riskier portfolio, increasing equity exposure might be an option, while a more conservative approach could involve boosting bond allocations. However, it's essential to first ensure the portfolio aligns with personal financial goals and risk tolerance. Regularly reviewing and rebalancing investments can help maintain an efficient and effective portfolio strategy.

Dividends Info

  • iShares III Public Limited Company - iShares Euro Government Bond 0-1yr UCITS ETF 1.60%
  • iShares EURO STOXX 50 UCITS ETF (DE) 2.80%
  • iShares Nikkei 225 UCITS ETF (DE) 0.60%
  • iShares Core MSCI EM IMI UCITS ETF 2.40%
  • iShares Euro Corporate Bond Interest Rate Hedged UCITS 1.80%
  • Vanguard FTSE North America UCITS 0.20%
  • Weighted yield (per year) 0.86%

The portfolio offers a modest total dividend yield of 0.86%, with contributions from various ETFs, such as the iShares EURO STOXX 50 UCITS ETF yielding 2.8%. While dividends provide a steady income stream, the overall yield is relatively low, reflecting the portfolio's growth-oriented focus. For investors seeking income, increasing exposure to higher-yielding assets might be beneficial. However, it's vital to balance income generation with growth potential. Regularly reviewing dividend yields and distributions can help ensure alignment with income needs and investment objectives, fostering a more comprehensive and satisfying investment experience.

Ongoing product costs Info

  • iShares III Public Limited Company - iShares Euro Government Bond 0-1yr UCITS ETF 0.22%
  • iShares EURO STOXX 50 UCITS ETF (DE) 0.11%
  • iShares Core MSCI EM IMI UCITS ETF 0.18%
  • iShares Euro Corporate Bond Interest Rate Hedged UCITS 0.25%
  • iShares Core MSCI Pac ex-Jpn ETF USD Acc 0.20%
  • Vanguard FTSE North America UCITS 0.10%
  • Weighted costs total (per year) 0.12%

The portfolio's costs are relatively low, with a total expense ratio (TER) of 0.12%, indicating efficient cost management. Low costs are crucial for maximizing net returns, as they reduce the drag on performance. This cost efficiency is a positive aspect of the portfolio, allowing more of the investment returns to be retained. Continually monitoring and seeking ways to minimize costs can enhance overall returns. Staying informed about any changes in fund fees and exploring lower-cost alternatives when appropriate can contribute to a more cost-effective and rewarding investment strategy.

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