Balanced Portfolio with Broad Diversification and Strong Performance Potential for Moderate Risk Investors

Report created on Jun 14, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

This portfolio consists of three ETFs, with the Vanguard FTSE All-World UCITS ETF USD Accumulation making up 60%, iShares Core MSCI Emerging Markets IMI UCITS at 30%, and Invesco EQQQ NASDAQ-100 UCITS ETF Acc at 10%. It's broadly diversified across different regions and sectors, providing a balanced exposure to global markets. The allocation suggests a strategy aimed at capturing global growth while maintaining a reasonable level of risk. Diversification is a key strength, reducing the impact of poor performance in any single sector or region. Enhancing this balance could involve periodically reviewing and adjusting allocations based on market conditions.

Growth Info

The historical performance of this portfolio has been strong, with a CAGR of 10.28% and a maximum drawdown of -14.04%. This indicates that the portfolio has delivered solid returns while managing risk effectively. The fact that only 12 days make up 90% of returns suggests a degree of volatility, which is typical for equity-heavy portfolios. Understanding past performance helps set realistic expectations for future returns. Regularly reviewing historical performance can provide insights into how the portfolio responds to different market conditions, helping to make informed decisions about future investments.

Projection Info

A Monte-Carlo simulation, which uses random sampling to predict future outcomes, was run with 1,000 simulations. The results show a median expected return of 321.65%, with a 67th percentile return of 459.97%. This suggests a strong potential for future growth, although the 5th percentile shows a conservative 60.84% return. With 999 simulations showing positive returns, the outlook is optimistic. While projections are not guarantees, they provide a framework for understanding potential outcomes. Periodically revisiting these projections can help align the portfolio with long-term financial goals and risk tolerance.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted towards stocks, comprising 99.83% of the total allocation. This reflects a high-risk, high-reward strategy typical of equity-focused investments. While stocks offer the potential for significant growth, they also come with increased volatility. For a balanced investor, maintaining a high stock allocation can be beneficial, but it may be worth considering adding other asset classes like bonds to mitigate risk. Regularly assessing the asset class mix can help ensure it aligns with the investor's risk tolerance and financial objectives.

Sectors Info

  • Technology
    27%
  • Financials
    16%
  • Consumer Discretionary
    11%
  • Telecommunications
    9%
  • Industrials
    9%
  • Health Care
    8%
  • Consumer Staples
    6%
  • Basic Materials
    5%
  • Energy
    4%
  • Utilities
    3%
  • Real Estate
    2%

Sector allocation is well-distributed, with significant exposure to Technology (27.14%), Financial Services (16.18%), and Consumer Cyclicals (11.45%). This diversification across sectors helps buffer against downturns in any single industry. Having a variety of sectors represented can provide stability and reduce overall portfolio risk. It's important to keep an eye on sector performance and trends to ensure the allocation remains optimal. Adjusting sector weights based on market conditions can enhance returns and reduce risk over time.

Regions Info

  • North America
    49%
  • Asien Schwellenländer
    19%
  • Asien
    11%
  • Europe Developed
    9%
  • Afrika/Mittlerer Osten
    4%
  • Japan
    4%
  • Latin America
    3%
  • Australasia
    1%
  • Europa Schwellenländer
    1%

The portfolio's geographic composition is predominantly focused on North America (48.57%), with notable allocations in Asia Emerging (18.87%) and Asia Developed (11.24%). This geographic diversification reduces exposure to regional economic and political risks. It provides access to growth opportunities in different parts of the world, balancing developed and emerging markets. Regularly reviewing geographic exposure can help identify opportunities to adjust allocations in response to global economic changes, ensuring the portfolio remains well-positioned for future growth.

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 is close to the efficient frontier, meaning it's well-balanced for its level of risk and return. The efficient frontier represents the optimal risk-return trade-off, and being near it suggests the portfolio is well-structured. However, the optimal portfolio has a higher expected return and risk level. Investors should consider whether their current risk level aligns with their financial goals and risk tolerance. Periodically reassessing the portfolio's position relative to the efficient frontier can help ensure it remains aligned with long-term objectives.

Ongoing product costs Info

  • Invesco EQQQ NASDAQ-100 UCITS ETF Acc 0.35%
  • iShares Core MSCI Emerging Markets IMI UCITS 0.18%
  • Vanguard FTSE All-World UCITS ETF USD Accumulation 0.22%
  • Weighted costs total (per year) 0.22%

The total expense ratio (TER) for the portfolio is 0.22%, which is relatively low and indicates efficient cost management. Lower costs mean more of the returns are kept by the investor, enhancing overall portfolio performance. Keeping costs low is crucial for long-term investment success, especially in index-tracking ETFs. Regularly reviewing expense ratios and seeking cost-effective investment options can help maximize returns. It's important to balance cost considerations with the potential for returns when selecting investment products.

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