A globally diversified ETF portfolio with balanced risk and strong historical growth
Report created on Jan 7, 2025Risk profile
4/7
Diversification profile
4/5
Positions
-
VW Vanguard FTSE All-World UCITS ETF USD Accumulation
VWCE - IE00BK5BQT80 100.00%
The portfolio consists entirely of the Vanguard FTSE All-World UCITS ETF, providing broad exposure to global equities. This single ETF offers a diversified mix across various sectors and regions, which is beneficial for reducing risk compared to holding individual stocks. However, relying on one ETF may limit customization and specific asset allocation adjustments. For a balanced profile, consider adding fixed income or alternative assets to enhance stability and further diversify risk exposure, especially in volatile markets.
Growth
Historically, the portfolio has performed well, achieving a Compound Annual Growth Rate (CAGR) of 13.02%. This impressive growth rate indicates strong past performance, though it's important to remember that past results don't guarantee future outcomes. The portfolio also experienced a maximum drawdown of -33.45%, highlighting its vulnerability to market downturns. To mitigate potential losses, consider strategies such as rebalancing or incorporating more defensive assets that may provide stability during volatile periods.
Projection
Forward projections using Monte Carlo simulations suggest a promising outlook, with a median portfolio value increase of 449.98% over the simulation period. These scenarios, based on historical data, offer a range of potential outcomes, emphasizing both growth opportunities and risks. Keep in mind that simulations are not predictions and are limited by assumptions of past market conditions. Regularly reviewing and adjusting the portfolio based on changing market dynamics and personal goals can help optimize future performance.
Asset classes
- Stocks 100%
The portfolio's allocation is heavily skewed towards stocks, representing nearly 100% of its composition. While this provides potential for high returns, it also increases exposure to market volatility. Diversification across different asset classes such as bonds or real estate can help balance risk and return. A more varied asset allocation could offer smoother performance by reducing reliance on equity markets alone, particularly during periods of economic uncertainty.
Sectors
- Technology 26%
- Financials 16%
- Health Care 11%
- Consumer Discretionary 10%
- Industrials 10%
- Telecommunications 8%
- Consumer Staples 6%
- Energy 4%
- Basic Materials 4%
- Utilities 3%
- Real Estate 2%
Sector allocation shows a significant concentration in technology, which comprises over 25% of the portfolio. While this sector has driven past growth, it may also introduce higher volatility, especially during interest rate changes or tech-specific downturns. Balancing sector weights to include more defensive areas like utilities or consumer staples could enhance stability. This approach can help mitigate risks associated with sector-specific fluctuations and provide a more resilient portfolio structure.
Regions
- North America 66%
- Europe Developed 14%
- Asia Emerging 6%
- Japan 6%
- Asia Developed 4%
- Australasia 2%
- Africa/Middle East 1%
- Latin America 1%
The portfolio is predominantly exposed to North America, making up over 65% of its geographic allocation. While this region offers growth opportunities, it may also increase sensitivity to local economic and political events. Diversifying further into underrepresented regions like Latin America or Africa could enhance global exposure and reduce regional risk. This broader diversification aligns with the goal of capturing growth from different economic cycles and markets worldwide.
Ongoing product costs
- Vanguard FTSE All-World UCITS ETF USD Accumulation 0.22%
- Weighted costs total (per year) 0.22%
The portfolio benefits from low costs, with a Total Expense Ratio (TER) of 0.22%. This cost efficiency supports better long-term returns by minimizing the drag on performance. Keeping costs low is crucial for maximizing investment gains, as higher fees can erode returns over time. Continuously monitoring and comparing expense ratios with similar investment options can ensure cost-effectiveness, allowing more of your investment to work towards achieving financial goals.
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