A broadly diversified portfolio with a balanced risk profile and strong historical performance

Report created on Jan 8, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

This portfolio is composed primarily of equity ETFs, with a significant 65.67% allocation to the Vanguard S&P 500 UCITS ETF. It also includes 23.88% in the Vanguard FTSE Developed Europe ex UK UCITS ETF and 10.45% in the iShares Core MSCI Emerging Markets IMI UCITS ETF. This composition leans heavily towards equities, which is typical for a balanced profile. Compared to a common benchmark, this allocation is well-diversified geographically but heavily weighted towards North American markets. To enhance diversification, consider incorporating other asset classes like bonds or commodities.

Growth Info

Historically, this portfolio has delivered a strong Compound Annual Growth Rate (CAGR) of 13.16%, outperforming many benchmarks. However, it also experienced a maximum drawdown of -33.37%, indicating potential vulnerability during market downturns. This performance suggests that while the portfolio has been successful in generating returns, it carries a level of risk that may not suit all investors. To mitigate this, consider strategies that can reduce volatility, such as adding more defensive assets or increasing cash reserves.

Projection Info

The forward projection using a Monte Carlo simulation, which uses historical data to model potential future outcomes, suggests an annualized return of 10.54%. The simulation indicates a 5th percentile return of 8.17% and a 67th percentile return of 355.29%. While these projections are insightful, it's important to remember that they are based on historical data and assumptions, which may not always predict future performance accurately. Regularly reviewing and adjusting the portfolio in response to changing market conditions can help maintain alignment with investment goals.

Asset classes Info

  • Stocks
    100%

With 99.96% of the portfolio in stocks, there's a heavy reliance on equity markets. This allocation provides growth potential but also increases exposure to market volatility. Compared to a balanced benchmark, the portfolio is under-diversified in terms of asset classes. Introducing other asset classes like fixed income or real estate could enhance stability and provide income through interest or rent, balancing the growth potential of equities.

Sectors Info

  • Technology
    26%
  • Financials
    16%
  • Health Care
    11%
  • Consumer Discretionary
    11%
  • Industrials
    10%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Energy
    3%
  • Basic Materials
    3%
  • Utilities
    3%
  • Real Estate
    2%

The portfolio is notably concentrated in the technology sector, which accounts for 26.31% of the allocation. While this sector has driven significant growth, it is also prone to volatility, especially during periods of regulatory scrutiny or interest rate hikes. The financial services and healthcare sectors also have substantial allocations, providing some balance. To mitigate sector-specific risks, consider diversifying further into other sectors such as utilities or consumer staples, which can offer more stability during economic downturns.

Regions Info

  • North America
    65%
  • Europe Developed
    24%
  • Asia Emerging
    5%
  • Asia Developed
    3%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is heavily skewed towards North America, with a 65.49% allocation. This overexposure can increase vulnerability to regional economic downturns or policy changes. The portfolio also has a significant allocation to developed Europe, but emerging markets are underrepresented. To improve geographic diversification, consider increasing exposure to regions like Asia or Latin America, which may offer growth opportunities and reduce reliance on North American markets.

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 appears to be well-positioned on the Efficient Frontier, indicating an optimal risk-return balance given the current asset mix. However, this optimization is based solely on the existing assets and their allocations. If risk tolerance or investment goals change, consider adjusting the asset weights to maintain efficiency. This process may involve adding new asset classes or sectors to enhance diversification and potentially improve the risk-return ratio further.

Ongoing product costs Info

  • iShares Core MSCI Emerging Markets IMI UCITS 0.18%
  • Vanguard FTSE Developed Europe ex UK UCITS 0.10%
  • Vanguard S&P 500 UCITS Acc 0.07%
  • Weighted costs total (per year) 0.09%

The portfolio's total expense ratio (TER) is impressively low at 0.09%, which is beneficial for long-term returns. Low costs mean more of your money is working for you rather than being eaten up by fees. This efficiency aligns with best practices for cost management in investing. To maintain this advantage, regularly review the TER of your holdings and consider replacing any higher-cost assets with lower-cost alternatives, ensuring you continue to maximize returns.

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