A balanced portfolio with global exposure and a focus on developed markets

Report created on Feb 8, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio is composed of two ETFs: iShares Core MSCI World UCITS ETF USD (Acc) at 80% and Vanguard FTSE Developed Europe ex UK UCITS at 20%. This structure leans heavily on developed markets, with a significant emphasis on North American equities. While this allocation provides broad exposure, it may lack diversity in emerging markets. A more balanced inclusion of global markets could enhance diversification and potential returns. Consider exploring additional ETFs that focus on underrepresented regions to mitigate geographic concentration and improve resilience against regional downturns.

Growth Info

Historically, the portfolio has performed well, achieving a Compound Annual Growth Rate (CAGR) of 12.40%. This growth rate indicates strong historical returns, outperforming many standard benchmarks. However, it's important to remember that past performance doesn't guarantee future results. The maximum drawdown of -33.53% highlights the potential volatility, especially during market downturns. To manage this risk, consider incorporating assets that historically perform well during market corrections, such as bonds or alternative investments, to provide a buffer against future downturns.

Projection Info

Using Monte Carlo simulations, which project future outcomes based on historical data, the portfolio has a 50th percentile projection of 310% growth. This suggests a favorable outlook, though it's crucial to note that simulations are not predictive. The projections indicate a high probability of positive returns, with 990 out of 1,000 simulations showing gains. However, these outcomes depend on market conditions remaining similar to historical trends. Diversifying further could help mitigate risks if future market dynamics differ from past patterns.

Asset classes Info

  • Stocks
    100%

The portfolio is entirely invested in stocks, which can lead to high returns but also increased volatility. This lack of diversification across asset classes means the portfolio is heavily dependent on equity market performance. By adding other asset classes, such as bonds or real estate, you could reduce risk and potentially enhance returns through diversification. Consider incorporating a small percentage of fixed-income assets to balance the risk and provide stability during market fluctuations.

Sectors Info

  • Technology
    24%
  • Financials
    17%
  • Industrials
    12%
  • Health Care
    12%
  • Consumer Discretionary
    11%
  • Telecommunications
    7%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    3%
  • Utilities
    3%
  • Real Estate
    2%

The portfolio is well-diversified across sectors, with significant allocations in Technology (24%), Financial Services (17%), and Industrials (12%). This broad sector exposure aligns with global benchmarks, providing a balanced approach to sector risk. However, the heavy weighting in Technology may lead to increased volatility, especially during periods of interest rate changes. To manage this risk, ensure the sector allocation aligns with your risk tolerance and consider adjusting if a more balanced sector exposure is desired.

Regions Info

  • North America
    62%
  • Europe Developed
    32%
  • Japan
    4%
  • Australasia
    1%
  • Asia Developed
    1%

Geographically, the portfolio is concentrated in North America (62%) and Europe Developed (32%), with minimal exposure to other regions. This focus on developed markets aligns with many global indices but lacks diversification in emerging markets. While developed markets offer stability, emerging markets can provide growth opportunities and diversification benefits. Consider increasing exposure to regions like Asia and Latin America to capture potential growth and reduce reliance on developed economies.

Market capitalization Info

  • Mega-cap
    46%
  • Large-cap
    35%
  • Mid-cap
    17%

The portfolio's market capitalization is predominantly in Mega (46%) and Big (35%) companies, with minimal exposure to Medium (17%) and no Small-cap stocks. Large-cap stocks offer stability and reliable returns, but smaller companies can provide higher growth potential. To enhance diversification and capture potential growth, consider adding exposure to small and medium-cap stocks. This can help balance the portfolio and increase opportunities for capital appreciation.

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 be optimized along the Efficient Frontier, which seeks the best risk-return ratio by adjusting asset allocations. Currently, the portfolio is well-diversified across sectors but concentrated in developed markets. By rebalancing to include more diverse geographic regions and asset classes, you can potentially enhance returns for a given level of risk. This optimization is solely based on current assets, emphasizing the importance of strategic allocation adjustments to achieve an optimal risk-return balance.

Ongoing product costs Info

  • iShares Core MSCI World UCITS ETF USD (Acc) 0.20%
  • Vanguard FTSE Developed Europe ex UK UCITS 0.10%
  • Weighted costs total (per year) 0.18%

The portfolio's total expense ratio (TER) is 0.18%, which is relatively low and beneficial for long-term returns. Lower costs mean more of your returns stay in your pocket, enhancing compounding effects over time. This cost efficiency aligns with best practices for maintaining a cost-effective investment strategy. Continue to monitor expense ratios and consider rebalancing if any new, lower-cost options become available that align with your investment goals and risk tolerance.

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