Balanced and Cautious Portfolio with Global Diversification and Low Costs Offers Stability and Moderate Growth Potential

Report created on Jun 14, 2024

Risk profile Info

3/7
Cautious
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Diversification profile Info

4/5
Broadly Diversified
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Positions

The portfolio is composed of three ETFs, with the Vanguard FTSE All-World UCITS ETF USD Accumulation taking the largest share at 60%. The remaining 40% is divided between the Amundi Stoxx Europe 600 UCITS ETF C EUR at 30% and the Xtrackers Nikkei 225 UCITS ETF 1C EUR at 10%. This composition reflects a cautious investment approach, aiming for a balanced exposure to global markets. The broad diversification across these ETFs helps in reducing risk while maintaining exposure to various regions and sectors. This setup is suitable for investors seeking stability with moderate growth potential.

Growth Info

Historically, the portfolio has shown a strong performance with a compound annual growth rate (CAGR) of 13.94%. Despite a maximum drawdown of -16.39%, the portfolio has demonstrated resilience, with 24 days accounting for 90% of the returns. This indicates a robust recovery potential after market downturns. For a cautious investor, this performance suggests a well-managed risk exposure while achieving consistent growth. It's essential to maintain this balance by regularly reviewing the portfolio's alignment with personal financial goals and risk tolerance.

Projection Info

Using a Monte Carlo simulation, which runs numerous scenarios to predict future performance, the portfolio shows promising forward projections. With a hypothetical initial investment, the simulation's 5th percentile suggests a modest return of 101.38%, while the median (50th percentile) projects a substantial 389.74% return. This indicates potential growth with high confidence, as 998 out of 1,000 simulations yielded positive returns. The annualized return across simulations stands at 12.86%, reinforcing the portfolio's potential to meet long-term financial goals with moderate risk.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted towards stocks, constituting 99.74% of the asset allocation. This focus on equities aligns with a strategy geared towards growth, albeit with higher volatility compared to more conservative asset classes like bonds. For a cautious investor, this stock-heavy allocation might seem aggressive, but the broad diversification within the ETFs helps mitigate some risks. To potentially lower risk, consider a gradual shift towards including more fixed-income assets as financial goals evolve or market conditions change.

Sectors Info

  • Technology
    20%
  • Financials
    16%
  • Industrials
    13%
  • Health Care
    12%
  • Consumer Discretionary
    11%
  • Telecommunications
    7%
  • Consumer Staples
    7%
  • Basic Materials
    5%
  • Energy
    4%
  • Utilities
    3%
  • Real Estate
    2%

Sector allocation within the portfolio is diverse, with Technology, Financial Services, and Industrials leading the way. This spread across multiple sectors provides a buffer against downturns in any single industry. The inclusion of Healthcare and Consumer Cyclicals further enhances this protection. Such a diversified sector exposure is crucial for maintaining portfolio stability and capitalizing on various economic cycles. Regularly reviewing sector performance and making adjustments can help in optimizing returns without significantly increasing risk.

Regions Info

  • North America
    39%
  • Europe Developed
    39%
  • Japan
    14%
  • Asia Emerging
    4%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is well-diversified, with significant exposure to North America and Europe Developed, each accounting for roughly 39%. Japan also has a notable presence at 13.53%. This global reach helps in capturing growth opportunities across different markets while spreading geopolitical and economic risks. The inclusion of emerging markets, though minimal, adds a layer of potential high-growth exposure. Keeping an eye on regional performance and adjusting allocations can ensure the portfolio remains aligned with global economic trends.

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 while the current setup is balanced, there is room for improvement. Moving along the efficient frontier can help achieve a more risk-adjusted return. To make the portfolio riskier, consider increasing exposure to high-growth sectors or regions. Conversely, for a more conservative approach, gradually shift towards fixed-income or lower-volatility assets. Optimizing the portfolio involves regular assessment of asset performance and alignment with personal risk tolerance and financial goals.

Ongoing product costs Info

  • Amundi Stoxx Europe 600 UCITS ETF C EUR 0.07%
  • Vanguard FTSE All-World UCITS ETF USD Accumulation 0.22%
  • Xtrackers Nikkei 225 UCITS ETF 1C EUR 0.09%
  • Weighted costs total (per year) 0.16%

The total expense ratio (TER) of the portfolio is a low 0.16%, indicating cost efficiency. This low-cost structure is advantageous as it minimizes the impact of fees on overall returns. The ETFs within the portfolio, such as the Amundi Stoxx Europe 600 and the Vanguard FTSE All-World, offer competitive expense ratios, contributing to this efficiency. Keeping costs low is crucial for maximizing net returns. Regularly reviewing expense ratios and considering lower-cost alternatives can further enhance portfolio performance.

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