A tech-heavy growth-focused portfolio with substantial exposure to North American markets

Report created on Dec 13, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio is heavily weighted towards equities, specifically ETFs, with the iShares NASDAQ 100 UCITS ETF comprising 25% of the allocation. This reflects a strong emphasis on technology and growth, with minimal allocation to other asset classes like cash and bonds. Such a composition can lead to higher potential returns but also increases volatility. Diversifying across different asset classes can help mitigate risks associated with market fluctuations. Consider incorporating more fixed-income assets to balance the risk-return profile, especially if market conditions become unfavorable for equities.

Growth Info

Historically, the portfolio has performed well, achieving a compound annual growth rate (CAGR) of 19.38%. However, it's important to note that the maximum drawdown was -31.83%, highlighting significant volatility. While past performance can provide insights, it is not a guarantee of future results. Investors should be aware that high returns often come with increased risk, as evidenced by the drawdown. It is advisable to maintain a diversified approach and consider rebalancing periodically to align with changing market conditions and personal risk tolerance.

Projection Info

The forward projection using a Monte Carlo simulation suggests a wide range of potential outcomes, with a median return of 957.77%. Monte Carlo simulations use historical data to model potential future returns, but they are not foolproof. They can help you understand the range of possible outcomes but cannot predict exact future performance. The simulation shows a high probability of positive returns, but the variance indicates potential for significant volatility. Regularly reviewing and adjusting your portfolio based on updated projections and market conditions is recommended.

Asset classes Info

  • Stocks
    100%

The portfolio is overwhelmingly concentrated in stocks, at 99.75%, with negligible amounts in cash and bonds. This heavy allocation to equities can drive growth, especially in a bullish market, but it also exposes the investor to higher risk during downturns. A more balanced allocation across asset classes, including bonds and cash, could provide stability and reduce risk. Consider gradually increasing exposure to fixed-income securities or other non-correlated assets to cushion against equity market volatility.

Sectors Info

  • Technology
    47%
  • Telecommunications
    11%
  • Consumer Discretionary
    10%
  • Financials
    8%
  • Health Care
    6%
  • Industrials
    6%
  • Consumer Staples
    4%
  • Basic Materials
    3%
  • Energy
    2%
  • Utilities
    2%
  • Real Estate
    1%

With 46.51% of the portfolio invested in technology, there is a significant concentration risk. While the tech sector has been a strong performer, it is also subject to rapid changes and volatility. Diversifying across other sectors such as healthcare, financial services, and consumer goods can help mitigate sector-specific risks. By spreading investments across various sectors, you can reduce the impact of any single sector's downturn on the overall portfolio performance.

Regions Info

  • North America
    75%
  • Asia Emerging
    13%
  • Europe Developed
    4%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

The portfolio has a strong geographic concentration in North America, making up 75.39% of the allocation. This exposes the investor to risks specific to this region, such as economic downturns or political instability. Diversifying geographically can help spread risk and take advantage of growth opportunities in other regions. Consider increasing exposure to emerging markets or other developed regions to enhance diversification and potentially improve the risk-return profile.

Redundant positions Info

  • iShares Core S&P 500 UCITS ETF USD (Acc)
    iShares Core MSCI World UCITS ETF USD (Acc)
    High correlation
  • iShares NASDAQ 100 UCITS ETF USD (Acc)
    Xtrackers MSCI World Information Technology UCITS ETF 1C
    High correlation

The portfolio includes highly correlated assets, such as the iShares Core S&P 500 and iShares Core MSCI World ETFs. High correlation means these assets tend to move in the same direction, limiting diversification benefits. Reducing overlap by selecting assets with lower correlation can enhance diversification and potentially improve risk-adjusted returns. Consider replacing some of the highly correlated ETFs with others that offer exposure to different markets or sectors.

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.

Optimization using the Efficient Frontier suggests that the portfolio could achieve a better risk-return balance by adjusting the allocation of current assets. The focus should be on reducing highly correlated assets and reallocating to achieve the best possible risk-return ratio without necessarily adding new asset classes. This process involves evaluating the trade-off between risk and return and making adjustments to improve efficiency. Regularly reassess your portfolio to ensure it remains aligned with your financial goals and risk tolerance.

Ongoing product costs Info

  • VanEck Vectors Video Gaming and eSports UCITS ETF A USD 0.55%
  • iShares Core MSCI World UCITS ETF USD (Acc) 0.20%
  • Franklin Libertyshares ICAV - Franklin Ftse India Ucits ETF 0.19%
  • SSgA SPDR ETFs Europe I Public Limited Company - SPDR MSCI Emerging Markets Small Cap UCITS ETF 0.55%
  • iShares Core S&P 500 UCITS ETF USD (Acc) 0.12%
  • iShares NASDAQ 100 UCITS ETF USD (Acc) 0.36%
  • Xtrackers MSCI World Information Technology UCITS ETF 1C 0.25%
  • Weighted costs total (per year) 0.27%

The portfolio's total expense ratio (TER) is 0.27%, which is relatively low, helping to maximize net returns over time. However, some ETFs, like the VanEck Vectors Video Gaming and eSports ETF, have higher fees at 0.55%. Reducing costs can lead to better long-term performance, as fees compound over time. Regularly review the cost structure and consider switching to lower-cost alternatives if they provide similar exposure and benefits, to optimize net returns.

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