A growth-focused portfolio with heavy North American weighting and strong historical returns

Report created on Jan 20, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio is primarily composed of two ETFs: Vanguard S&P 500 UCITS Acc (70%) and Vanguard FTSE All-World UCITS ETF USD Accumulation (30%). This allocation leans heavily towards U.S. equities, with a smaller portion allocated to global markets. Compared to a diversified benchmark, this portfolio is more concentrated but benefits from the high liquidity and stability of these well-known funds. While this composition offers exposure to a broad range of sectors and companies, it may limit exposure to emerging markets and smaller companies. Consider diversifying further to enhance global exposure and potentially capture growth in less represented markets.

Growth Info

Historically, the portfolio has demonstrated strong performance with a compound annual growth rate (CAGR) of 15.07%. This indicates robust growth, particularly when compared to benchmark indices. However, the maximum drawdown of -25.39% suggests vulnerability to market downturns. The portfolio's reliance on a few days for the bulk of returns highlights potential volatility. While past performance is promising, it's crucial to remember that historical returns are not guaranteed in the future. Regularly reviewing performance against objectives can help maintain alignment with goals.

Projection Info

The Monte Carlo simulation, which uses historical data to model potential future outcomes, suggests a wide range of possibilities for the portfolio's future value. With 1,000 simulations, the 5th percentile projects a modest 84.7% increase, while the 50th percentile suggests a 528.4% increase. This spread highlights the uncertainty in future returns. While the simulation shows a high probability of positive outcomes, it's important to remember that these projections are based on past data and can't predict future market events. Regularly updating simulations can provide more timely insights.

Asset classes Info

  • Stocks
    100%

The portfolio's allocation is entirely in stocks, with 100% exposure to equities. This concentration in a single asset class aligns with a growth-focused strategy but may increase volatility. Compared to a benchmark that includes bonds or other asset classes, this portfolio could experience greater fluctuations in value. While equity investments offer the potential for higher returns, they also come with higher risk. Introducing other asset classes, such as fixed income or real estate, could provide stability and reduce overall risk, especially during market downturns.

Sectors Info

  • Technology
    31%
  • Financials
    14%
  • Consumer Discretionary
    11%
  • Health Care
    10%
  • Telecommunications
    9%
  • Industrials
    8%
  • Consumer Staples
    6%
  • Energy
    4%
  • Utilities
    3%
  • Basic Materials
    2%
  • Real Estate
    2%

The portfolio's sector allocation is notably tech-heavy, with 31% in technology, followed by financial services (14%) and consumer cyclicals (11%). This composition aligns with common benchmarks but may expose the portfolio to sector-specific risks, such as tech volatility during interest rate hikes. The diverse sector exposure is beneficial, but the high concentration in a few sectors could lead to increased risk. To mitigate this, consider rebalancing to achieve a more even distribution across sectors, potentially reducing reliance on any single sector's performance.

Regions Info

  • North America
    90%
  • Europe Developed
    5%
  • Japan
    2%
  • Asia Emerging
    2%
  • Asia Developed
    1%
  • Australasia
    1%

Geographically, the portfolio is heavily weighted towards North America, with 90% exposure, and minimal allocation to Europe, Japan, and emerging markets. This concentration provides stability but limits diversification benefits. Compared to global benchmarks, the portfolio's geographic exposure is narrow, potentially missing out on growth opportunities in underrepresented regions. Diversifying geographically can help mitigate risks associated with regional economic downturns and political events. Consider increasing exposure to international markets to achieve a more balanced global presence.

Market capitalization Info

  • Mega-cap
    47%
  • Large-cap
    35%
  • Mid-cap
    18%

The portfolio's market capitalization is predominantly in mega-cap (47%) and big-cap (35%) stocks, with no allocation to small or micro-cap stocks. This focus on larger companies provides stability and lower volatility, as these companies are typically more established and resilient. However, it may limit potential growth opportunities found in smaller, more agile companies. To enhance diversification and growth potential, consider incorporating small and micro-cap stocks, which can offer high returns but come with increased risk.

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 could potentially be optimized using the Efficient Frontier, which helps identify the best possible risk-return ratio based on current assets. By adjusting the allocation between the Vanguard ETFs, the portfolio might achieve a more favorable balance between risk and return. However, this optimization focuses solely on existing assets and does not consider adding new asset classes or sectors. Regularly reviewing and adjusting allocations can help ensure the portfolio remains aligned with risk tolerance and investment goals.

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) 0.12%

The total expense ratio (TER) for the portfolio is impressively low at 0.12%, reflecting the cost-effectiveness of the chosen Vanguard ETFs. Low costs are crucial for maximizing long-term returns, as they reduce the drag on performance. This efficient cost structure is a significant advantage and aligns with best practices for managing investment expenses. Maintaining this low-cost approach will support the portfolio's growth objectives, ensuring that more of the returns are retained by the investor.

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