A balanced portfolio with strong growth potential and significant tech sector exposure

Report created on Dec 27, 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 heavily weighted towards ETFs, with Vanguard S&P 500 UCITS Acc making up 44.46% and Vanguard FTSE All-World UCITS ETF USD Accumulation at 39.05%. The iShares S&P 500 USD Information Technology Sector UCITS ETF rounds it out with 16.49%. Compared to a typical balanced portfolio, this one leans significantly towards equities, particularly in the U.S. market. This composition suggests a focus on growth, with less emphasis on bonds or other asset classes, which could typically provide more stability. Consider diversifying asset classes to potentially reduce risk and increase stability.

Growth Info

Historically, the portfolio has performed well, with a Compound Annual Growth Rate (CAGR) of 15.83%. This is quite impressive, especially when compared to average market returns. However, it's important to note the maximum drawdown of -33.27%, indicating potential volatility during market downturns. While past performance can give insights, it does not guarantee future results. To mitigate potential risks, consider strategies that can provide a buffer during downturns, such as increasing diversification.

Projection Info

Forward projections using Monte Carlo simulations, which analyze potential outcomes based on historical data, suggest a wide range of possible returns. The median outcome is an 858.83% increase, but the 5th percentile shows a 168.12% increase, indicating a range of possible outcomes. While these projections can help gauge potential future performance, they are not certain. To align with your risk tolerance, consider adjusting your portfolio to manage potential downsides.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily concentrated in stocks, with 99.94% in equities and negligible amounts in other asset classes. This lack of diversification across asset classes could increase risk, especially during market downturns. Compared to a more balanced benchmark, this portfolio is underexposed to bonds or other stabilizing assets. Consider introducing other asset classes, like bonds or real estate, to enhance diversification and potentially reduce volatility.

Sectors Info

  • Technology
    41%
  • Financials
    12%
  • Consumer Discretionary
    9%
  • Health Care
    9%
  • Industrials
    7%
  • Telecommunications
    7%
  • Consumer Staples
    5%
  • Energy
    3%
  • Basic Materials
    2%
  • Utilities
    2%
  • Real Estate
    2%

The portfolio is highly concentrated in the technology sector, accounting for 41.01% of the allocation. While this sector has driven significant growth, it also introduces higher volatility, particularly during interest rate changes or tech market corrections. Compared to common benchmarks, the sector concentration is notably high. To reduce sector-specific risks, consider redistributing some allocation to underrepresented sectors, such as utilities or real estate.

Regions Info

  • North America
    86%
  • Europe Developed
    6%
  • Asia Emerging
    2%
  • Japan
    2%
  • Asia Developed
    2%
  • Australasia
    1%

Geographically, the portfolio is heavily tilted towards North America, with 86.20% exposure. This overexposure to a single region may limit the benefits of geographic diversification. Compared to global benchmarks, there's an underrepresentation of regions like Europe and Asia. To mitigate regional risks and benefit from global growth opportunities, consider increasing exposure to other regions, which can also help in hedging against currency fluctuations.

Redundant positions Info

  • Vanguard FTSE All-World UCITS ETF USD Accumulation
    Vanguard S&P 500 UCITS Acc
    High correlation

The portfolio includes highly correlated assets, particularly between the Vanguard S&P 500 and FTSE All-World ETFs. High correlation means these assets tend to move in the same direction, which can limit diversification benefits during market downturns. Reducing overlap by replacing one of these with a less correlated asset could improve risk management. This could enhance the portfolio's resilience during volatile periods, providing a more balanced risk-return profile.

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 can be optimized for risk versus return using the Efficient Frontier, which suggests the best possible risk-return ratio based on current assets. However, highly correlated assets may limit the potential for optimization. To enhance efficiency, consider adjusting allocations among existing assets or introducing new ones with different risk-return profiles. This could help achieve a more optimal balance between expected returns and acceptable risk levels.

Ongoing product costs Info

  • iShares S&P 500 USD Information Technology Sector UCITS 0.15%
  • Vanguard S&P 500 UCITS Acc 0.07%
  • Vanguard FTSE All-World UCITS ETF USD Accumulation 0.22%
  • Weighted costs total (per year) 0.14%

The portfolio's Total Expense Ratio (TER) is 0.14%, which is relatively low and supports better long-term performance by minimizing drag on returns. This cost efficiency aligns well with best practices for maintaining a cost-effective investment strategy. While the costs are impressively low, regularly reviewing them can ensure they remain competitive. Consider exploring options to further reduce costs, such as switching to lower-cost alternatives if available.

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