A balanced global equity portfolio with strong diversification across regions and sectors

Report created on Feb 23, 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 consists entirely of equity ETFs, with a notable emphasis on global diversification. The largest holdings are in European and Emerging Markets, each comprising 25% of the portfolio. This structure supports a balanced risk approach, aligning well with the balanced risk classification. Compared to a typical equity benchmark, this portfolio is diversified across multiple regions, reducing reliance on any single market. However, the absence of bonds or other asset classes may limit defensive capabilities during market downturns. Consider incorporating a small allocation to bonds or other asset classes to enhance stability.

Growth Info

Historically, the portfolio has delivered a commendable CAGR of 10.51%, indicating robust growth over time. This performance is competitive when compared to global equity benchmarks, suggesting effective diversification and asset selection. However, the portfolio has experienced a significant maximum drawdown of -33.68%, reflecting vulnerability during market downturns. While past performance is not indicative of future results, it provides a useful context for understanding potential risks and returns. Regularly reviewing performance against benchmarks can help ensure alignment with long-term goals.

Projection Info

The Monte Carlo simulation, which uses historical data to project future outcomes, suggests a promising outlook for the portfolio. With 1,000 simulations, the median outcome indicates a potential portfolio growth of 258.7%, while the worst-case scenario still shows positive returns. However, it's important to note that simulations are based on past data and cannot predict future market conditions. To mitigate risks, consider regularly reviewing and rebalancing the portfolio to maintain alignment with evolving market trends and personal risk tolerance.

Asset classes Info

  • Stocks
    100%

The portfolio is entirely invested in stocks, which offers high growth potential but also increases exposure to market volatility. This single asset class approach may lead to higher returns during bull markets but could result in significant losses during downturns. Compared to a benchmark that typically includes bonds and other asset classes, this portfolio may lack defensive elements. To enhance risk management, consider introducing a small percentage of bonds or alternative investments to achieve a more balanced asset allocation.

Sectors Info

  • Financials
    22%
  • Technology
    18%
  • Industrials
    12%
  • Consumer Discretionary
    10%
  • Health Care
    9%
  • Telecommunications
    6%
  • Basic Materials
    6%
  • Consumer Staples
    6%
  • Energy
    5%
  • Utilities
    3%
  • Real Estate
    3%

The sector allocation is diverse, with significant exposure to Financial Services and Technology, each comprising over 18% of the portfolio. This composition reflects a balanced approach, aligning well with global equity benchmarks. The presence of various sectors helps mitigate sector-specific risks and capitalizes on different economic cycles. However, the Technology sector's prominence could lead to increased volatility during interest rate hikes. Monitoring sector trends and making adjustments as needed can help maintain a balanced risk-return profile.

Regions Info

  • North America
    25%
  • Europe Developed
    25%
  • Asia Developed
    15%
  • Asia Emerging
    12%
  • Japan
    9%
  • Australasia
    8%
  • Africa/Middle East
    3%
  • Latin America
    2%
  • Europe Emerging
    1%

Geographically, the portfolio is well-diversified, with significant allocations to North America and Europe Developed, each at 25%. This distribution aligns closely with global benchmarks, providing balanced exposure to established markets. However, the relatively low allocation to emerging markets, particularly in Latin America and Africa/Middle East, may limit potential growth opportunities. Consider increasing exposure to these regions to enhance diversification and capture growth potential in emerging economies, while remaining mindful of associated risks.

Market capitalization Info

  • Mega-cap
    49%
  • Large-cap
    33%
  • Mid-cap
    15%
  • Small-cap
    2%

The portfolio's market capitalization is heavily skewed towards mega-cap stocks, comprising 49% of the portfolio. This focus on large, established companies provides stability and lower volatility compared to smaller stocks. However, it may limit the portfolio's growth potential, as smaller companies often offer higher returns. To optimize diversification, consider increasing exposure to small and medium-cap stocks, which can enhance growth prospects and reduce reliance on large-cap performance. Regularly reviewing market cap distribution can help maintain a balanced 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 has room for optimization on the Efficient Frontier, with potential to achieve higher returns at the same risk level. By adjusting asset allocations, the expected return could increase to 19.24%, significantly above the current return expectation. This optimization focuses on achieving the best risk-return ratio without altering the overall risk level. Regularly reviewing and adjusting allocations can help maintain an efficient portfolio, ensuring alignment with personal investment goals and risk tolerance. However, it's important to remember that this optimization is based on historical data and may not predict future outcomes.

Dividends Info

  • Vanguard FTSE Developed Asia Pacific ex Japan UCITS 1.80%
  • Weighted yield (per year) 0.29%

The portfolio's overall dividend yield is relatively low at 0.29%, with the Vanguard FTSE Developed Asia Pacific ex Japan UCITS contributing the highest yield at 1.80%. While dividends provide a steady income stream, the portfolio's focus on growth-oriented ETFs may limit dividend income. For investors seeking income, consider adding higher-yielding assets to boost the overall yield. However, ensure that any changes align with the portfolio's growth objectives and risk tolerance, maintaining a balanced approach to income and growth.

Ongoing product costs Info

  • Xtrackers MSCI Canada ESG Screened UCITS ETF 1C 0.35%
  • iShares Core MSCI Europe UCITS ETF EUR (Acc) 0.20%
  • iShares Core MSCI Japan IMI UCITS ETF USD (Acc) 1.00%
  • iShares Core MSCI Emerging Markets IMI UCITS 0.18%
  • Vanguard FTSE Developed Asia Pacific ex Japan UCITS 0.15%
  • Xtrackers MSCI USA UCITS ETF 1C 0.12%
  • Weighted costs total (per year) 0.26%

The portfolio's total expense ratio (TER) is 0.26%, which is competitive and supports long-term performance. Low costs help maximize returns by reducing the drag on investment growth. The Xtrackers MSCI Canada ESG Screened UCITS ETF has the highest TER at 0.35%, while the Xtrackers MSCI USA UCITS ETF is the most cost-effective at 0.12%. Regularly reviewing and optimizing costs can further enhance returns. Consider replacing higher-cost ETFs with lower-cost alternatives, ensuring that changes align with the portfolio's diversification and risk management goals.

What next?

Create your own report?

Analyze your portfolio

Join our community!

Join Discord

The information provided on this platform is for informational purposes only and should not be considered as financial or investment advice. Insightfolio does not provide investment advice, personalized recommendations, or guidance regarding the purchase, holding, or sale of financial assets. The tools and content are intended for educational purposes only and are not tailored to individual circumstances, financial needs, or objectives.

Insightfolio assumes no liability for the accuracy, completeness, or reliability of the information presented. Users are solely responsible for verifying the information and making independent decisions based on their own research and careful consideration. Use of the platform should not replace consultation with qualified financial professionals.

Investments involve risks. Users should be aware that the value of investments may fluctuate and that past performance is not an indicator of future results. Investment decisions should be based on personal financial goals, risk tolerance, and independent evaluation of relevant information.

Insightfolio does not endorse or guarantee the suitability of any particular financial product, security, or strategy. Any projections, forecasts, or hypothetical scenarios presented on the platform are for illustrative purposes only and are not guarantees of future outcomes.

By accessing the services, information, or content offered by Insightfolio, users acknowledge and agree to these terms of the disclaimer. If you do not agree to these terms, please do not use our platform.

Instrument logos provided by Elbstream.

Help us improve Insightfolio

Your feedback makes a difference! Share your thoughts in our quick survey. Take the survey