A balanced portfolio with global equity focus and minimal bond exposure
Report created on Jan 8, 2025Risk profile
4/7
Diversification profile
3/5
Positions
-
IU iShares MSCI Europe SRI UCITS ETF EUR (Acc)
IUSK - IE00B52VJ196 33.40% -
2B iShares MSCI World SRI UCITS ETF EUR (Acc)
2B7K - IE00BYX2JD69 33.30% -
SX iShares Core S&P 500 UCITS ETF USD (Acc)
SXR8 - IE00B5BMR087 33.30%
The portfolio is composed of three ETFs, each holding roughly a third of the total allocation. This distribution leans heavily on equities, offering exposure to both global and regional markets. Compared to a typical balanced portfolio, which might include more bonds or alternative assets, this one is more equity-centric. This setup may appeal to those seeking growth but could expose the portfolio to higher volatility. Consider adding more asset classes to diversify risk and stabilize returns, especially during market downturns.
Growth
Historically, the portfolio has delivered a strong Compound Annual Growth Rate (CAGR) of 13.8%. This impressive performance, however, comes with a maximum drawdown of -32.74%, indicating significant risk during market downturns. Compared to benchmarks, this return is commendable, but the volatility is notable. Investors should be prepared for potentially large swings in value. To mitigate risk, consider diversifying further or incorporating defensive assets that could cushion against future market declines.
Projection
Forward projections using Monte Carlo simulations suggest a broad range of outcomes. With 1,000 simulations, the portfolio shows a potential annualized return of 14.83%. However, remember that these projections rely on historical data, which is not a guarantee of future results. The 5th percentile suggests a minimum return of 128.86%, while the 67th percentile indicates a return of 697.03%. This variability underscores the importance of maintaining a diversified approach to manage potential risks.
Asset classes
- Stocks 99%
- Other 1%
The portfolio is heavily skewed towards stocks, accounting for over 99% of the total allocation. This singular focus limits diversification benefits typically gained from a mix of asset classes like bonds or real estate. Compared to benchmarks, which often include a mix of equities and fixed income, this portfolio is highly concentrated. To enhance stability and reduce risk, consider integrating other asset classes that could provide balance and reduce overall volatility.
Sectors
- Technology 26%
- Financials 15%
- Consumer Discretionary 11%
- Health Care 11%
- Industrials 11%
- Telecommunications 9%
- Consumer Staples 7%
- Basic Materials 3%
- Energy 3%
- Utilities 2%
- Real Estate 2%
Sector allocation is diverse, with technology leading at 25.7%, followed by financial services and consumer cyclicals. This composition aligns well with benchmark norms, offering a balanced sectoral exposure. However, the tech-heavy allocation could lead to higher volatility, especially during periods of interest rate fluctuations. To mitigate this risk, consider rebalancing towards sectors that traditionally perform well in different economic cycles, ensuring the portfolio remains resilient.
Regions
- North America 66%
- Europe Developed 34%
Geographically, the portfolio is concentrated in North America and Europe, with negligible exposure to Asia. This distribution aligns with global benchmarks but lacks diversification into emerging markets. Such exposure could enhance growth potential and provide a hedge against regional downturns. Consider increasing geographic diversification to capture opportunities in underrepresented regions, which could offer growth and risk mitigation benefits.
Redundant positions
-
High correlationiShares MSCI World SRI UCITS ETF EUR (Acc)iShares Core S&P 500 UCITS ETF USD (Acc)
The portfolio exhibits high correlation between the iShares MSCI World and the S&P 500 ETFs. This correlation limits diversification benefits, as these assets tend to move in tandem. During market downturns, this could amplify losses. To improve diversification, consider replacing one of these ETFs with assets that have a lower correlation to the rest of the portfolio. This strategy could enhance risk management and potentially improve overall returns.
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.
To optimize the portfolio using the Efficient Frontier, focus on reducing asset overlap. High correlation between current ETFs limits diversification. By adjusting allocations or introducing new, less correlated assets, the portfolio can achieve a better risk-return balance. This optimization aims to find the best possible risk-return ratio, enhancing efficiency without necessarily altering the overall diversification strategy.
Ongoing product costs
- iShares MSCI World SRI UCITS ETF EUR (Acc) 0.23%
- iShares MSCI Europe SRI UCITS ETF EUR (Acc) 0.20%
- iShares Core S&P 500 UCITS ETF USD (Acc) 0.12%
- Weighted costs total (per year) 0.18%
The portfolio's total expense ratio (TER) is 0.18%, which is impressively low. This cost efficiency supports better long-term performance by reducing the drag on returns. Compared to average fund costs, this is a strong alignment with best practices. Maintaining low costs is crucial for maximizing net returns. Regularly review and ensure that any new investments or changes to the portfolio maintain this cost-effective approach.
What next?
Create your own report?
Join our community!
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