Balanced Risk and Moderate Diversification in a Global Equity Portfolio with Solid Performance Potential

Report created on Jul 5, 2024

Risk profile Info

4/7
Balanced
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Diversification profile Info

3/5
Moderately Diversified
← Less diversification More diversification →

Positions

The portfolio consists entirely of the db x-trackers MSCI World Index UCITS DR 1C ETF, which offers a broad exposure to global equities. As a single ETF, it provides a convenient way to invest in a diverse range of stocks across various sectors and regions. While it's a simple and straightforward approach, relying solely on one ETF may limit the ability to tailor the portfolio to specific investment goals or risk preferences. It's crucial to regularly review the ETF's performance and alignment with personal investment objectives to ensure it continues to meet expectations.

Growth Info

Historically, this portfolio has demonstrated strong performance, with a compound annual growth rate (CAGR) of 12.65%. However, it experienced a maximum drawdown of -33.59%, indicating significant volatility at times. The concentration of returns in just 37 days suggests that market timing could have a substantial impact on overall performance. Understanding these dynamics is essential for managing expectations and preparing for potential market fluctuations. Maintaining a long-term perspective and avoiding reactionary decisions during downturns can help in achieving desired investment outcomes.

Projection Info

Using a Monte Carlo simulation with a hypothetical initial investment, the portfolio shows a wide range of potential future outcomes. This simulation, which ran 1,000 scenarios, predicts an annualized return of 13.28%. The 5th percentile suggests a modest growth of 93.03%, while the 50th and 67th percentiles indicate more substantial gains of 406.04% and 565.28%, respectively. These projections highlight the inherent uncertainty in investing and underscore the importance of diversification and risk management to navigate various market conditions effectively.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted towards stocks, with 99.63% allocated to equities, and minimal exposure to cash and other assets. This concentration in equities aligns with a growth-oriented strategy, but it also increases exposure to market volatility. While equities can offer higher returns over the long term, they also come with higher risk. For those seeking a more balanced approach, incorporating other asset classes such as bonds could help mitigate risk and provide more stability during market downturns.

Sectors Info

  • Technology
    26%
  • Financials
    15%
  • Health Care
    11%
  • Industrials
    10%
  • Consumer Discretionary
    10%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    3%
  • Utilities
    3%
  • Real Estate
    2%

Sector allocation within the portfolio is diverse, with significant exposure to technology (26.30%), financial services (15.32%), and healthcare (11.44%). This distribution reflects the composition of the underlying MSCI World Index, providing a broad representation of the global economy. While this diversification across sectors can help reduce sector-specific risks, it's important to remain vigilant about potential overexposure to any single sector. Regularly reviewing sector performance and trends can help in making informed decisions about maintaining or adjusting sector allocations.

Regions Info

  • North America
    75%
  • Europe Developed
    16%
  • Japan
    5%
  • Australasia
    2%
  • Asien
    1%

Geographically, the portfolio is predominantly invested in North America (75.39%), followed by Europe Developed (16.06%) and Japan (5.50%). This reflects a strong bias towards developed markets, which can offer stability but may limit exposure to the growth potential of emerging markets. While developed markets are generally less volatile, diversifying into emerging markets could provide additional growth opportunities and reduce regional concentration risk. Balancing geographic exposure can enhance the portfolio's resilience to economic shifts in specific regions.

Ongoing product costs Info

  • db x-trackers MSCI World Index UCITS DR 1C 0.17%
  • Weighted costs total (per year) 0.17%

With a Total Expense Ratio (TER) of 0.17%, the portfolio is cost-efficient, minimizing the drag on returns. Low costs are a significant advantage, allowing more of the investment to compound over time. While the costs are competitive, it's still important to periodically review them in comparison to other similar investment options. Keeping investment costs low is a key factor in maximizing net returns and achieving financial goals more efficiently.

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