A growth-focused portfolio with a strong emerging markets emphasis and global diversification
Report created on Jan 25, 2025Risk profile
5/7
Diversification profile
4/5
Positions
-
EI iShares Core MSCI Emerging Markets IMI UCITS
EIMI - IE00BKM4GZ66 58.82% -
SW SPDR® MSCI World UCITS ETF
SWRD - IE00BFY0GT14 41.18%
The portfolio is composed of two ETFs: iShares Core MSCI Emerging Markets IMI UCITS (58.82%) and SPDR MSCI World UCITS ETF (41.18%). This structure leans heavily towards emerging markets, providing exposure to high-growth regions. Compared to a typical growth portfolio, which might balance between developed and emerging markets, this portfolio is more aggressive. The concentration in emerging markets can lead to higher volatility but also offers potential for significant growth. To maintain a balanced risk profile, consider adjusting the allocation to diversify more evenly across regions.
Growth
The portfolio has demonstrated a historical CAGR of 9.02%, which is solid for a growth-oriented investment. However, the max drawdown of -33.95% indicates significant volatility. This performance aligns with the risk classification of 5 out of 7. Compared to benchmarks, the returns are competitive, though the risk level is higher. Investors should be prepared for potential downturns but can expect rewarding growth over the long term. To mitigate risk, consider incorporating more defensive assets or diversifying further within developed markets.
Projection
Monte Carlo simulations project a wide range of outcomes, with a 50th percentile return of 210.8% and a 67th percentile of 321.7%. These simulations use historical data to predict future performance, but it's important to remember that past performance does not guarantee future results. The projections suggest a strong potential for growth, but also highlight the inherent risks. To enhance predictability, consider adding assets with more stable returns or rebalancing periodically to manage risk.
Asset classes
- Stocks 100%
The portfolio is 100% allocated to stocks, which aligns with its growth focus but limits diversification. While equities offer high growth potential, they also come with increased volatility. A more diversified portfolio might include bonds or other asset classes to provide stability during market downturns. Consider incorporating fixed income or alternative investments to reduce risk and improve the portfolio's resilience against market fluctuations.
Sectors
- Technology 25%
- Financials 19%
- Consumer Discretionary 12%
- Industrials 9%
- Telecommunications 9%
- Health Care 7%
- Consumer Staples 5%
- Basic Materials 5%
- Energy 4%
- Utilities 3%
- Real Estate 2%
The portfolio's sector allocation is tech-heavy, with 25% in technology, followed by financial services at 19%. This concentration may lead to heightened volatility, especially during interest rate changes. While the tech sector has been a strong performer, it can be sensitive to economic shifts. To reduce sector-specific risks, consider diversifying into sectors like healthcare or consumer staples, which tend to be more stable and can provide balance during market turbulence.
Regions
- North America 32%
- Asia Emerging 30%
- Asia Developed 18%
- Europe Developed 7%
- Africa/Middle East 6%
- Latin America 4%
- Japan 2%
- Europe Emerging 1%
- Australasia 1%
Geographic exposure is diverse, with significant allocations to North America (32%) and Asia Emerging (30%). This distribution provides a broad global reach but leans towards regions with higher growth potential and risk. The underweight in Europe and Japan could limit exposure to more stable markets. To enhance geographic diversification, consider increasing allocations to developed markets, which can offer stability and reduce the overall risk of the portfolio.
Market capitalization
- Mega-cap 48%
- Large-cap 32%
- Mid-cap 16%
- Small-cap 2%
The portfolio is heavily weighted towards mega-cap (48%) and big-cap (32%) stocks, providing stability and liquidity. However, the limited exposure to medium and small caps may restrict growth potential. Smaller companies can offer high returns but come with increased risk. To capture more growth opportunities, consider increasing the allocation to medium and small-cap stocks, which can provide diversification benefits and enhance the portfolio's growth prospects.
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 using the Efficient Frontier, which suggests a potential return of 13.76% with a risk level of 17.69%. This optimization indicates that the current asset allocation could be adjusted to achieve a better risk-return ratio. Consider reallocating assets to align with the Efficient Frontier, which involves finding the combination of investments that offers the highest expected return for a given level of risk. This approach can enhance the portfolio's efficiency without compromising its growth focus.
Ongoing product costs
- iShares Core MSCI Emerging Markets IMI UCITS 0.18%
- SPDR® MSCI World UCITS ETF 0.12%
- Weighted costs total (per year) 0.16%
The portfolio's total expense ratio (TER) is 0.16%, which is low and supports better long-term performance by minimizing costs. This cost efficiency is a significant advantage and aligns well with best practices for managing investment expenses. Keeping costs low allows more of the portfolio's returns to compound over time, enhancing overall growth. Continue monitoring and managing costs to ensure they remain competitive and support the portfolio's growth objectives.
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