A balanced portfolio with global exposure emphasizing North American equities and moderate risk
Report created on Jan 16, 2025Risk profile
4/7
Diversification profile
4/5
Positions
-
VW Vanguard FTSE All-World UCITS ETF USD Accumulation
VWCE - IE00BK5BQT80 70.00% -
SX iShares Core S&P 500 UCITS ETF USD (Acc)
SXR8 - IE00B5BMR087 20.00% -
LY Amundi Stoxx Europe 600 UCITS ETF C EUR
LYP6 - LU0908500753 10.00%
This portfolio is composed primarily of ETFs, with the Vanguard FTSE All-World UCITS ETF making up 70%, iShares Core S&P 500 UCITS ETF at 20%, and Amundi Stoxx Europe 600 UCITS ETF at 10%. This allocation shows a strong preference for diversified global equity exposure. While this setup is typical for balanced portfolios, it leans heavily on North American markets due to the S&P 500 focus. Diversification across multiple geographies and sectors is beneficial for risk management, but the heavy weighting towards one region could limit potential benefits. To enhance diversification, consider adding exposure to other regions or asset classes.
Growth
The portfolio has demonstrated strong historical performance, with a compound annual growth rate (CAGR) of 13.25%. This indicates robust growth over time, outperforming many traditional benchmarks. However, it also experienced a maximum drawdown of -33.62%, highlighting significant volatility during downturns. While past performance is impressive, it's crucial to remember that it doesn't guarantee future results. To manage potential downturns, consider strategies that include rebalancing or diversifying into less volatile assets.
Projection
Forward projections using Monte Carlo simulations suggest a median return of 420.84%, with 993 out of 1,000 simulations showing positive outcomes. This tool uses historical data to estimate future possibilities, though it's not a crystal ball. The high variability in outcomes underscores the importance of understanding potential risks and rewards. While the projections are optimistic, it's wise to remain cautious and ensure the portfolio aligns with your risk tolerance and investment goals.
Asset classes
- Stocks 100%
Nearly 100% of the portfolio is invested in stocks, which suggests a high risk-return profile typical of equity-heavy portfolios. While equities offer growth potential, they also come with increased volatility. The lack of allocation to other asset classes like bonds or real estate limits diversification. To reduce risk, consider incorporating other asset classes that might provide stability during market fluctuations, thereby enhancing the portfolio's resilience.
Sectors
- Technology 25%
- Financials 16%
- Health Care 11%
- Consumer Discretionary 11%
- Industrials 10%
- Telecommunications 8%
- Consumer Staples 6%
- Energy 4%
- Basic Materials 4%
- Utilities 3%
- Real Estate 2%
The portfolio is heavily weighted towards technology (25.48%) and financial services (16.09%), with significant exposure to healthcare and consumer cyclicals. This concentration aligns with current market trends but may lead to higher volatility, especially during economic shifts. A broad sector spread helps mitigate sector-specific risks. Consider reviewing sector allocations to ensure they align with your risk tolerance and market outlook, potentially redistributing to underrepresented sectors for balance.
Regions
- North America 66%
- Europe Developed 20%
- Asia Emerging 4%
- Japan 4%
- Asia Developed 3%
- Australasia 1%
- Africa/Middle East 1%
- Latin America 1%
The portfolio's geographic allocation is predominantly in North America (65.84%), with Europe Developed at 20.13%. This indicates a significant tilt towards developed markets, which are generally more stable but may offer lower growth potential compared to emerging markets. The limited exposure to regions like Asia and Latin America may restrict growth opportunities. Consider diversifying geographically to capture potential growth in emerging markets, balancing stability with opportunity.
Redundant positions
-
High correlationiShares Core S&P 500 UCITS ETF USD (Acc)Vanguard FTSE All-World UCITS ETF USD Accumulation
The portfolio includes highly correlated assets, particularly between the iShares Core S&P 500 and Vanguard FTSE All-World ETFs. High correlation means these assets tend to move in the same direction, which can limit diversification benefits. During market downturns, this could increase portfolio risk. To improve diversification, consider replacing one of these ETFs with an asset that has a lower correlation, thereby spreading risk more effectively.
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 benefit from optimization using the Efficient Frontier concept, which seeks the best risk-return ratio. Currently, high correlation between some assets suggests room for improvement. By adjusting the allocation to include less correlated assets, you could potentially enhance returns without increasing risk. This involves reassessing the current asset mix and considering alternatives that offer better diversification and efficiency.
Ongoing product costs
- Amundi Stoxx Europe 600 UCITS ETF C EUR 0.07%
- iShares Core S&P 500 UCITS ETF USD (Acc) 0.12%
- Vanguard FTSE All-World UCITS ETF USD Accumulation 0.22%
- Weighted costs total (per year) 0.18%
The total expense ratio (TER) of 0.18% is relatively low, which is advantageous for long-term performance. Low costs mean more of your investment returns stay in your pocket, rather than going to fees. This cost efficiency is a positive aspect of the portfolio, supporting better returns over time. Continue monitoring fees to ensure they remain competitive, and consider lower-cost alternatives if they become available.
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