A balanced portfolio with a strong focus on North American equities and technology

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

What type of investor this portfolio is suitable for

Balanced Investors

This portfolio suits an investor with a balanced risk tolerance, aiming for growth with some exposure to volatility. It is ideal for those with a medium to long-term investment horizon, seeking capital appreciation primarily through equities. The focus on North American and technology stocks suggests a preference for high-growth sectors, while the diversified ETF structure provides a degree of safety. This investor may prioritize low costs and efficient returns over immediate income, making it suitable for those comfortable with market fluctuations.

Positions

  • Vanguard FTSE All-World UCITS ETF
    VGWL - IE00B3RBWM25
    50.00%
  • Invesco EQQQ NASDAQ-100 UCITS ETF
    EQQQ - IE0032077012
    25.00%
  • Vanguard S&P 500 UCITS ETF
    VUSA - IE00B3XXRP09
    25.00%

This portfolio is composed entirely of equity ETFs, with a significant 50% allocation to the Vanguard FTSE All-World UCITS ETF. The remainder is evenly split between the Invesco EQQQ NASDAQ-100 UCITS ETF and the Vanguard S&P 500 UCITS ETF, each at 25%. This concentration in ETFs provides broad exposure to global markets, though it leans heavily toward North American equities. Compared to typical balanced portfolios, which often include bonds or other asset classes, this portfolio is more equity-heavy. This can lead to higher volatility but also the potential for greater returns. Consider adding other asset classes for better risk management.

Growth Info

Historically, this portfolio has performed well, with a compound annual growth rate (CAGR) of 15.97%. This impressive growth rate indicates strong past performance, likely driven by the robust returns of the underlying indices. However, it's important to note the maximum drawdown of -31.98%, highlighting the potential for significant short-term losses. Comparing this to a benchmark can provide insight into its relative performance. While past performance is not indicative of future results, understanding these trends can help set realistic expectations. Diversifying further could help mitigate such drawdowns in the future.

Projection Info

Using Monte Carlo simulations, which project future outcomes based on historical data, this portfolio shows promising potential. The median (50th percentile) projected return is 837.2%, with a 5th percentile return of 196.3%, indicating strong growth potential even in less favorable scenarios. While these projections are encouraging, they are based on historical data and assumptions, which may not hold true in the future. The high number of positive simulations suggests a robust portfolio, but diversification could further enhance risk-adjusted returns. Regularly reviewing and adjusting allocations can help maintain alignment with investment goals.

Asset classes Info

  • Stocks
    100%
  • Other
    0%
  • Cash
    0%
  • No data
    0%

The portfolio is entirely allocated to stocks, with no exposure to bonds, real estate, or other asset classes. This singular focus on equities can yield high returns but also exposes the portfolio to greater volatility. Compared to a benchmark balanced portfolio, which might include 40-60% in bonds, this portfolio is more aggressive. Diversifying into other asset classes can provide a buffer against market downturns and improve overall stability. Consider incorporating fixed-income securities or alternative investments to balance risk and return.

Sectors Info

  • Technology
    34%
  • Consumer Discretionary
    12%
  • Financials
    12%
  • Telecommunications
    10%
  • Health Care
    9%
  • Industrials
    8%
  • Consumer Staples
    6%
  • Energy
    3%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    2%

The portfolio is heavily weighted towards technology, which comprises 34% of the allocation. Other notable sectors include consumer cyclicals and financial services, each at 12%. This sector concentration can lead to higher volatility, especially if the tech sector faces downturns. However, it also positions the portfolio to benefit from tech-driven growth. A more balanced sectoral approach could reduce risk. Consider rebalancing to include more defensive sectors such as healthcare or utilities, which can provide stability during economic uncertainty.

Regions Info

  • North America
    83%
  • Europe Developed
    7%
  • Asia Emerging
    3%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    1%
  • Europe Emerging
    0%

With 83% of the portfolio's assets in North America, there's a significant geographic concentration. While this has historically been beneficial due to strong U.S. market performance, it also increases vulnerability to regional economic shifts. The limited exposure to Europe and Asia suggests a potential area for diversification. A more geographically balanced portfolio could mitigate risks associated with regional downturns and take advantage of growth opportunities in emerging markets. Consider increasing allocations to underrepresented regions for a more globally diversified approach.

Market capitalization Info

  • Mega-cap
    49%
  • Large-cap
    35%
  • Mid-cap
    16%
  • Small-cap
    0%
  • Micro-cap
    0%

The portfolio is primarily invested in large-cap stocks, with a 49% allocation to mega-cap and 35% to big-cap companies. This focus on large, established companies typically offers stability and lower volatility compared to small-cap stocks. However, it may limit exposure to the higher growth potential of smaller companies. Consider diversifying market capitalization by including more mid or small-cap stocks to capture growth opportunities. This could enhance overall returns while still maintaining a level of stability through large-cap holdings.

Redundant positions Info

  • Vanguard FTSE All-World UCITS ETF
    Vanguard S&P 500 UCITS ETF
    High correlation

The portfolio exhibits high correlation between the Vanguard FTSE All-World UCITS ETF and the Vanguard S&P 500 UCITS ETF. High correlation means these assets tend to move together, which can limit diversification benefits. In market downturns, this could lead to amplified losses. Diversification aims to reduce risk by including uncorrelated assets. Consider replacing one of these ETFs with an asset that has a lower correlation to enhance diversification. This could improve risk-adjusted returns and provide better protection against market volatility.

Dividends Info

  • Vanguard FTSE All-World UCITS ETF 0.80%
  • Vanguard S&P 500 UCITS ETF 0.50%
  • Weighted yield (per year) 0.52%

The portfolio's dividend yield is relatively low, with a total yield of 0.52%. This reflects the focus on growth-oriented ETFs like the Invesco EQQQ NASDAQ-100, which typically prioritize capital appreciation over income. For investors seeking regular income, this may be insufficient. Dividends can provide a steady income stream and reduce reliance on capital gains for returns. Consider incorporating high-dividend-yielding assets to boost income potential. This can add a layer of stability, especially in volatile markets, while maintaining growth exposure.

Ongoing product costs Info

  • Invesco EQQQ NASDAQ-100 UCITS ETF 0.35%
  • Vanguard FTSE All-World UCITS ETF 0.22%
  • Vanguard S&P 500 UCITS ETF 0.07%
  • Weighted costs total (per year) 0.22%

With a total expense ratio (TER) of 0.22%, the portfolio's costs are impressively low. Low costs are beneficial as they enhance net returns over time, allowing more of the portfolio's growth to be realized by the investor. This aligns well with best practices in cost management for long-term investing. While the Invesco EQQQ NASDAQ-100 ETF has a higher individual TER of 0.35%, the overall portfolio costs remain competitive. Continue to monitor and manage costs to ensure they remain low, supporting better long-term performance.

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.

The portfolio could benefit from optimization using the Efficient Frontier, which seeks the best possible risk-return ratio. Currently, the high correlation between some assets suggests potential for improvement. By reallocating within the existing asset mix, the portfolio could achieve a more efficient balance. This process involves adjusting weights to maximize expected returns for a given level of risk. Consider exploring optimization strategies to enhance the portfolio's efficiency. Keep in mind that this approach focuses on risk-return trade-offs, not diversification or specific asset classes.

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