A balanced globally diversified portfolio with a focus on large-cap stocks and low costs

Report created on Feb 8, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio comprises two ETFs, each holding a 50% allocation, emphasizing global equity exposure. Both ETFs offer broad diversification across various sectors and regions, aligning with a balanced risk profile. The portfolio is heavily weighted towards equities, with no exposure to bonds or other asset classes. This composition suits investors seeking equity growth but may lack the stability bonds can offer. Consider introducing fixed-income assets to mitigate potential volatility, especially during market downturns.

Growth Info

The portfolio has delivered a strong historic CAGR of 13.34%, indicating robust past growth. However, it also experienced a significant max drawdown of -32.50%, reflecting potential volatility. Compared to benchmarks, this performance suggests high returns with notable risk. While past performance is no guarantee of future results, maintaining a balanced approach may help manage risk. Diversifying further into less volatile asset classes could stabilize returns during turbulent periods.

Projection Info

Using Monte Carlo simulations, the portfolio's future performance shows a wide range of potential outcomes. With a 50th percentile end value of 481.1% and 999 simulations showing positive returns, the projections are optimistic. However, simulations rely on historical data, which may not predict future market conditions accurately. Regularly reviewing and adjusting the portfolio can help align with changing market dynamics and personal financial goals, ensuring that projections remain relevant.

Asset classes Info

  • Stocks
    100%

The portfolio's 100% allocation to stocks highlights a strong focus on equities, offering growth potential but also higher volatility. Compared to benchmarks with mixed asset classes, this allocation may lack the diversification benefits of bonds or real estate. Including other asset classes can reduce risk and provide income stability. Consider integrating fixed-income securities or alternative investments to enhance diversification and mitigate potential equity market downturns.

Sectors Info

  • Technology
    30%
  • Financials
    15%
  • Consumer Discretionary
    12%
  • Health Care
    10%
  • Telecommunications
    9%
  • Industrials
    9%
  • Consumer Staples
    5%
  • Energy
    3%
  • Basic Materials
    3%
  • Real Estate
    2%
  • Utilities
    2%

The portfolio is heavily weighted towards technology at 30%, followed by financial services and consumer cyclicals. This concentration in tech may lead to higher volatility, especially during interest rate changes or regulatory shifts. Compared to common benchmarks, this sector allocation aligns with growth-focused strategies. However, it may benefit from increased balance by investing in underrepresented sectors like utilities or real estate, which can provide stability and reduce overall risk.

Regions Info

  • North America
    83%
  • Europe Developed
    8%
  • Asia Emerging
    3%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

With 83% of the portfolio in North America, geographic exposure is heavily skewed towards this region. While this aligns with global benchmarks, it may limit diversification benefits. Exposure to emerging markets and Europe is minimal, potentially overlooking growth opportunities. Consider increasing allocations to regions like Asia and Europe to enhance diversification and capture potential growth in underrepresented markets, reducing dependence on North American performance.

Market capitalization Info

  • Large-cap
    39%
  • Mega-cap
    36%
  • Mid-cap
    23%
  • Small-cap
    1%

The portfolio's market capitalization is dominated by big and mega-cap stocks, comprising 75% of the allocation. This focus on large companies provides stability and lower risk compared to small or micro-cap stocks. However, it may limit growth potential. Introducing more mid or small-cap stocks could enhance diversification and capture higher growth opportunities. Balancing market capitalization exposure can optimize risk and return, aligning with a balanced investment strategy.

Redundant positions Info

  • iShares MSCI World SRI UCITS ETF EUR (Acc)
    Vanguard FTSE All-World UCITS ETF USD Accumulation
    High correlation

Both ETFs in the portfolio are highly correlated, meaning they tend to move together. This high correlation may limit diversification benefits and increase risk during market downturns. While correlated assets can simplify management, they may not provide the risk mitigation expected from diversification. Consider adding assets with lower correlation to the existing ETFs, such as bonds or alternative investments, to enhance diversification and reduce potential portfolio 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's current allocation may not be fully optimized on the Efficient Frontier, as it contains highly correlated assets. The Efficient Frontier represents the best possible risk-return ratio for a given set of assets. By reducing overlap and introducing less correlated assets, the portfolio can potentially achieve better diversification and improved risk-return balance. Reassessing asset allocation and exploring alternative investments could enhance overall efficiency.

Ongoing product costs Info

  • iShares MSCI World SRI UCITS ETF EUR (Acc) 0.23%
  • Vanguard FTSE All-World UCITS ETF USD Accumulation 0.22%
  • Weighted costs total (per year) 0.22%

The portfolio's total expense ratio (TER) of 0.22% is impressively low, supporting better long-term performance by minimizing costs. This aligns with best practices for cost efficiency, ensuring that more returns are retained. Maintaining low costs is crucial for maximizing net returns. Regularly reviewing and comparing TERs of potential additions or replacements can help ensure the portfolio remains cost-effective, contributing to long-term investment success.

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