A balanced portfolio focused on North American equities with low geographic diversification

Report created on Apr 9, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

1/5
Single-Focused
Less diversification More diversification

Positions

The portfolio is heavily weighted towards equities, with 70% allocated to stocks and 30% to bonds. This composition aligns with a balanced investment approach, offering growth potential through equities while providing stability through bonds. Compared to typical benchmarks, the bond allocation is slightly lower, suggesting a preference for growth. To enhance diversification, consider incorporating other asset classes like real estate or commodities. This could potentially reduce risk and increase long-term returns by spreading exposure across different market conditions.

Growth Info

Historically, the portfolio has performed well, with a CAGR of 8.27%, indicating robust growth over the years. However, the maximum drawdown of -23.70% highlights potential volatility, especially during market downturns. By comparison, global equity benchmarks often experience similar drawdowns, suggesting the portfolio's risk level is consistent with its growth focus. To mitigate future drawdowns, consider increasing the bond allocation or introducing defensive stocks. This adjustment could help stabilize returns during volatile periods without significantly sacrificing growth potential.

Projection Info

The Monte Carlo simulation, using 1,000 trials, projects an annualized return of 5.91%. While this provides a range of potential outcomes, it's important to note that simulations rely on historical data, which may not accurately predict future performance. The simulation's 5th percentile indicates a potential loss of -39.4%, highlighting the risk of significant downturns. To improve future projections, consider diversifying geographically or by sector. This could reduce reliance on historical trends and provide a buffer against unforeseen market changes.

Asset classes Info

  • Stocks
    70%
  • Bonds
    30%

The portfolio's asset allocation consists of 70% stocks and 30% bonds. This mix is typical for a balanced investor seeking moderate growth with some income stability. Compared to common benchmarks, the allocation is slightly more equity-focused, which may enhance growth potential but also increases risk. Introducing other asset classes, such as real estate or commodities, could improve diversification. This broader exposure might help mitigate risks associated with market fluctuations and provide more consistent returns over time.

Sectors Info

  • Technology
    20%
  • Financials
    11%
  • Consumer Discretionary
    8%
  • Health Care
    7%
  • Telecommunications
    6%
  • Industrials
    6%
  • Consumer Staples
    4%
  • Energy
    3%
  • Real Estate
    2%
  • Utilities
    2%
  • Basic Materials
    2%

Sector-wise, the portfolio is concentrated in technology (20%) and financial services (11%). This allocation reflects a focus on growth sectors, which could benefit from technological advancements and economic recovery. However, such concentration may lead to increased volatility, especially during tech market corrections. To balance this, consider reallocating some exposure to defensive sectors like utilities or consumer staples. This adjustment could provide more stability and reduce the impact of sector-specific downturns on overall portfolio performance.

Regions Info

  • North America
    69%

Geographically, the portfolio is heavily focused on North America, with 69% exposure. This concentration limits global diversification and may increase vulnerability to regional economic shifts. Compared to global benchmarks, which often include significant international exposure, this portfolio could benefit from broader geographic diversification. Introducing investments in Europe, Asia, or emerging markets could reduce regional risk and provide access to diverse growth opportunities, potentially enhancing long-term returns and stability.

Market capitalization Info

  • Mega-cap
    28%
  • Large-cap
    21%
  • Mid-cap
    12%
  • Small-cap
    6%
  • Micro-cap
    3%

The portfolio's market capitalization distribution leans towards mega (28%) and big (21%) companies, with smaller allocations to medium (12%), small (6%), and micro (3%) caps. This skew towards larger companies suggests a preference for stability and established growth. While large-cap stocks often provide reliable returns, incorporating more small and medium-cap exposure could enhance growth potential. These smaller companies may offer higher returns during economic expansions, though they also carry higher risk, which should be balanced according to risk tolerance.

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 can be optimized using the Efficient Frontier, which seeks to achieve the best possible risk-return ratio based on current assets. This approach involves adjusting the allocation between stocks and bonds to enhance returns without increasing risk. By focusing on the Efficient Frontier, the portfolio can be fine-tuned to align with the investor's risk tolerance and investment goals, potentially improving overall performance while maintaining a balanced approach to risk management.

Ongoing product costs Info

  • iShares $ Treasury Bond 20+yr UCITS ETF USD (Acc) 0.07%
  • iShares $ Treasury Bond 1-3 UCITS Acc 0.10%
  • SPDR® MSCI USA Small Cap Value Weighted UCITS ETF USD Acc 0.30%
  • Vanguard FTSE North America UCITS ETF USD Accuimulation 0.10%
  • Weighted costs total (per year) 0.11%

The portfolio's total expense ratio (TER) is 0.11%, which is impressively low and supports long-term performance by minimizing costs. Compared to industry averages, this TER is favorable, allowing more of the portfolio's returns to be retained. Maintaining low costs is crucial for optimizing returns, as fees can significantly erode gains over time. Continue to monitor expenses and consider cost-effective investment options to sustain the portfolio's efficiency and maximize potential returns.

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