Balanced Portfolio with Moderate Diversification and Strong Historical Performance

Report created on Jun 14, 2024

Risk profile Info

4/7
Balanced
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Diversification profile Info

3/5
Moderately Diversified
← Less diversification More diversification →

Positions

The portfolio is mainly composed of three ETFs, with Invesco EQQQ NASDAQ-100 UCITS ETF Acc making up 60%, Amundi Stoxx Europe 600 UCITS ETF C EUR at 30%, and Xtrackers Nikkei 225 UCITS ETF 1C EUR at 10%. This allocation indicates a balanced approach, focusing on major global indices. A significant portion is invested in the NASDAQ-100, which leans heavily into tech stocks. This composition provides exposure to diverse markets, primarily in North America and Europe, with a smaller allocation to Japan. The portfolio's structure suggests a moderately diversified strategy, balancing growth and risk.

Growth Info

With a historical CAGR of 14.36%, the portfolio has demonstrated strong performance. The maximum drawdown of -18.7% indicates some volatility, but this is expected given the significant exposure to tech stocks. The fact that just 14 days make up 90% of returns highlights the importance of staying invested for the long term to capture these high-return periods. This historical performance suggests a growth-oriented strategy, which has been effective in generating substantial returns over time. However, investors should remain aware of the inherent volatility associated with such a portfolio.

Projection Info

Using a Monte Carlo simulation with 1,000 iterations, the portfolio shows promising potential. The 5th percentile projects a 53.53% increase, while the median (50th percentile) projects a 317.87% increase. The 67th percentile even suggests a 441.49% growth. With 987 simulations showing positive returns, the annualized return across simulations is 12.03%. This forward projection indicates a strong likelihood of continued growth, although it's important to remember that these are hypothetical scenarios. Monte Carlo simulations help illustrate potential future outcomes based on historical data but cannot guarantee specific results.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted towards stocks, with 99.87% of the assets in this class. There is minimal exposure to other asset classes, such as cash or bonds. This allocation aligns with a growth-focused strategy, aiming to capitalize on equity market returns. However, the lack of diversification across asset classes can increase risk, particularly during market downturns. To potentially reduce volatility, consider incorporating more diverse asset classes over time. This could help balance the portfolio and provide a cushion during periods of market instability.

Sectors Info

  • Technology
    35%
  • Consumer Discretionary
    13%
  • Telecommunications
    12%
  • Industrials
    9%
  • Health Care
    9%
  • Consumer Staples
    7%
  • Financials
    7%
  • Basic Materials
    3%
  • Energy
    2%
  • Utilities
    2%
  • Real Estate
    1%

Sector allocation shows a strong emphasis on technology, comprising 35.39% of the portfolio. Other significant sectors include consumer cyclicals, communication services, and industrials. This sector distribution reflects a growth-oriented approach, with a focus on industries expected to drive future economic growth. However, the heavy tech weighting can lead to increased volatility, especially during sector-specific downturns. While the current allocation has contributed to past success, consider periodically reviewing sector exposure to ensure alignment with long-term goals and risk tolerance, potentially diversifying into more stable sectors.

Regions Info

  • North America
    59%
  • Europe Developed
    30%
  • Japan
    10%

Geographically, the portfolio is predominantly allocated to North America (58.75%), followed by Europe Developed (30.44%) and Japan (10%). This geographic distribution provides exposure to some of the world's largest and most stable economies, which is beneficial for growth. However, the focus on developed markets may limit exposure to the potentially higher growth rates of emerging markets. To enhance diversification, consider gradually increasing exposure to other regions, including emerging markets, which could provide opportunities for growth and help balance the potential risks associated with developed market volatility.

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 there is room for improvement in achieving an optimal risk-return balance. To move towards a riskier portfolio, consider increasing exposure to high-growth sectors or regions. Conversely, for a more conservative approach, incorporate more stable asset classes like bonds. The efficient frontier can guide these adjustments, helping to align the portfolio with personal risk preferences and financial goals. Before making changes, it's essential to evaluate the current portfolio's alignment with long-term objectives and risk tolerance, ensuring any modifications support overall investment strategy.

Ongoing product costs Info

  • Invesco EQQQ NASDAQ-100 UCITS ETF Acc 0.35%
  • Amundi Stoxx Europe 600 UCITS ETF C EUR 0.07%
  • Xtrackers Nikkei 225 UCITS ETF 1C EUR 0.09%
  • Weighted costs total (per year) 0.24%

The portfolio's total expense ratio (TER) is 0.24%, which is relatively low, indicating cost-effective management. The individual ETFs have varying costs, with the Invesco EQQQ NASDAQ-100 UCITS ETF Acc being the most expensive at 0.35%. Keeping costs low is crucial for maximizing net returns over time. It's important to periodically review expense ratios to ensure they remain competitive. While the current costs are reasonable, always be on the lookout for opportunities to reduce fees further, as even small cost savings can significantly impact long-term investment performance.

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