Cautious and Diversified Portfolio with Strong Global Exposure and Balanced Sector Allocation

Report created on Jul 1, 2024

Risk profile Info

3/7
Cautious
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio is composed of a mix of equity and bond ETFs, with a strong emphasis on global equity exposure. The allocation is 50% in Amundi Prime Global, 30% in JPM Global Equity Multi-Factor, 13% in Vanguard Global Aggregate Bond, and 7% in Amundi Index FTSE EPRA NAREIT Global. This composition provides a well-rounded exposure to global markets. A diversified portfolio like this helps in spreading risk across different asset classes and geographies, offering a stable approach for cautious investors. To enhance diversification, consider reviewing the balance between equity and bonds, ensuring it aligns with long-term goals.

Growth Info

Historically, the portfolio has demonstrated a CAGR of 9.08%, indicating a healthy growth rate over time. However, it has also experienced a maximum drawdown of -22.48%, highlighting the potential for significant short-term volatility. Despite this, the portfolio has shown resilience, with 90% of returns generated in just 17 days. Understanding these metrics helps in setting realistic expectations for future performance. To mitigate drawdown risks, consider periodically rebalancing the portfolio to maintain the desired risk profile and ensure alignment with financial objectives.

Projection Info

Using a Monte-Carlo simulation with 1,000 iterations, the portfolio shows a range of potential outcomes based on historical data. The 5th percentile indicates a potential loss of -17.21%, while the median suggests a growth of 102.78%. The 67th percentile projects a 150.76% increase in value. This simulation helps visualize the range of possible future returns, providing insights into the portfolio's risk and return dynamics. To improve the odds of achieving desired outcomes, maintain a disciplined investment approach and consider adjusting the portfolio to reflect changing market conditions and personal risk tolerance.

Asset classes Info

  • Stocks
    87%
  • Bonds
    13%

The portfolio is heavily weighted towards stocks, with 86.85% in equities, 12.98% in bonds, and minimal allocations in cash and other assets. This asset class distribution suggests a growth-focused strategy, suitable for investors seeking capital appreciation. While equities offer higher potential returns, they also come with increased volatility. To balance risk and reward, consider increasing the bond allocation, which can provide stability and income. Regularly review the asset class mix to ensure it aligns with evolving financial goals and market conditions, adjusting as necessary to maintain the desired risk profile.

Sectors Info

  • Technology
    16%
  • Financials
    11%
  • Real Estate
    11%
  • Health Care
    9%
  • Industrials
    8%
  • Consumer Discretionary
    8%
  • Consumer Staples
    6%
  • Telecommunications
    6%
  • Utilities
    4%
  • Energy
    4%
  • Basic Materials
    4%

The portfolio's sector allocation is diverse, with technology (16.26%), financial services (11.06%), and real estate (10.89%) leading the way. This spread across different sectors can help mitigate the impact of sector-specific downturns. However, the concentration in technology could introduce volatility given its cyclical nature. A diversified sector allocation is crucial for managing risk and capturing growth opportunities. To maintain a balanced exposure, periodically assess the sector weights and consider redistributing assets if any sector becomes disproportionately large, ensuring alignment with both market trends and personal investment objectives.

Regions Info

  • North America
    64%
  • Europe Developed
    13%
  • Japan
    6%
  • Australasia
    2%
  • Asia Developed
    1%

Geographically, the portfolio is predominantly invested in North America (63.93%), followed by Europe Developed (13.48%) and Japan (5.62%). This geographic spread provides exposure to major global markets, offering a buffer against regional economic fluctuations. However, the concentration in North America might limit potential benefits from growth in emerging markets. A well-rounded geographic allocation can enhance diversification and capture global growth opportunities. To achieve a more balanced global exposure, consider increasing allocations to underrepresented regions, ensuring the portfolio remains resilient against region-specific risks and capitalizes on diverse market dynamics.

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 is close to the efficient frontier, indicating that it is well-optimized for its risk level. However, it is not the absolute optimal portfolio, which suggests there is room for improvement. By adjusting the risk level along the efficient frontier, investors can achieve either a riskier or more conservative portfolio. This involves rebalancing the asset allocation to better align with individual risk preferences and financial goals. To further optimize, consider exploring different asset mixes that could enhance returns while maintaining acceptable risk levels, ensuring the portfolio remains efficient and effective in meeting long-term objectives.

Dividends Info

  • Vanguard Global Aggregate Bond UCITS ETF GBP Hedged Income 3.00%
  • Weighted yield (per year) 0.39%

The portfolio's dividend yield is relatively low, at 0.39%, with the Vanguard Global Aggregate Bond ETF contributing a 3.0% yield. This indicates a focus on capital growth rather than income generation. While dividends can provide a steady income stream, they are not the primary driver of returns in this portfolio. Understanding the role of dividends in the overall strategy helps in setting realistic income expectations. If income generation becomes a priority, consider incorporating higher-yielding assets, ensuring they align with the broader investment goals and risk tolerance, without compromising the portfolio's growth potential.

Ongoing product costs Info

  • Amundi Index Solutions - Amundi Index FTSE EPRA NAREIT Global UCITS ETF DR 0.24%
  • Amundi Index Solutions - Amundi Prime Global UCITS ETF DR GBP 0.05%
  • Vanguard Global Aggregate Bond UCITS ETF GBP Hedged Income 0.10%
  • Weighted costs total (per year) 0.05%

The portfolio's costs are competitive, with a total TER of 0.05%, reflecting efficient management. Lower costs are crucial for maximizing net returns over time, as they directly impact overall performance. The cost structure of this portfolio suggests a focus on cost-effective investment strategies, which is beneficial for long-term growth. To maintain cost efficiency, regularly review expense ratios and consider replacing higher-cost funds with more economical alternatives, ensuring that cost savings do not come at the expense of diversification or performance. Keeping investment costs low is a key component of a successful long-term strategy.

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