A cautious portfolio with solid global diversification and a significant gold allocation

Report created on Feb 23, 2025

Risk profile Info

3/7
Cautious
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio is composed of three main ETFs, with the Vanguard FTSE All-World UCITS ETF USD Accumulation holding the largest share at 50%. This is complemented by a 30% allocation to the iShares Physical Gold ETC and a 20% allocation to the Vanguard FTSE 100 UCITS GBP Acc. This composition suggests a cautious investment approach, focusing on global diversification with a significant hedge through gold. Compared to a typical benchmark, this portfolio leans heavily on equities and gold, which may provide stability but limits exposure to fixed income assets. Consider diversifying further by incorporating bonds to balance risk and enhance income potential, especially in volatile markets.

Growth Info

Historically, the portfolio has demonstrated strong performance with a Compound Annual Growth Rate (CAGR) of 12.18%, indicating robust growth over time. The maximum drawdown of -18.04% suggests moderate volatility, which is acceptable for a cautious investor. Compared to a benchmark, the portfolio's performance is commendable, offering a good balance between risk and return. However, it's crucial to remember that past performance does not guarantee future results. To maintain this performance, consider regularly reviewing and rebalancing the portfolio to ensure it aligns with your investment goals and risk tolerance.

Projection Info

Forward projections using Monte Carlo simulations suggest a wide range of potential outcomes, with the median (50th percentile) projecting a 382.1% return. Monte Carlo simulations use historical data to predict future performance by running thousands of possible scenarios, helping investors understand potential risks and returns. While the simulations show a high likelihood of positive returns, with 997 out of 1,000 simulations yielding gains, it's important to note that these projections are not guarantees. Regularly reviewing market conditions and adjusting the portfolio as needed can help manage risk and capitalize on opportunities.

Asset classes Info

  • Stocks
    70%
  • Other
    30%

The portfolio's asset allocation consists of 70% stocks and 30% in other assets, primarily gold. This allocation provides a strong equity base for growth while the gold component offers a hedge against inflation and market volatility. Compared to typical benchmarks, this portfolio lacks exposure to bonds, which could provide additional income and stability. To enhance diversification and reduce risk, consider adding fixed income assets, which can help cushion the portfolio during market downturns and provide a more stable return stream.

Sectors Info

  • Technology
    13%
  • Financials
    13%
  • Industrials
    8%
  • Health Care
    8%
  • Consumer Discretionary
    7%
  • Consumer Staples
    6%
  • Telecommunications
    5%
  • Energy
    4%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    1%

The sector allocation is fairly balanced, with technology and financial services each representing 13% of the portfolio, followed by industrials and healthcare at 8% each. This diverse sector exposure aligns well with common benchmarks, providing a good mix of growth and defensive sectors. However, the portfolio's exposure to consumer cyclicals and defensive sectors is relatively low, which could impact performance during economic downturns. To optimize sector diversification, consider increasing exposure to sectors with lower representation, ensuring the portfolio remains resilient across different market conditions.

Regions Info

  • North America
    34%
  • Europe Developed
    27%
  • Japan
    3%
  • Asia Emerging
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is diversified with 34% in North America and 27% in Europe Developed, reflecting a strong focus on established markets. The remaining allocation is spread across Japan, Asia, and Australasia, with minimal exposure to emerging markets. This geographic distribution aligns with global benchmarks but may limit potential growth opportunities in emerging markets. To enhance geographic diversification, consider increasing exposure to emerging markets, which can offer higher growth potential and help balance the portfolio's risk profile.

Market capitalization Info

  • Mega-cap
    33%
  • No data
    30%
  • Large-cap
    25%
  • Mid-cap
    12%

The portfolio's market capitalization is heavily weighted towards mega-cap stocks at 33%, with significant exposure to big and medium caps as well. This focus on larger companies provides stability and lower risk, as these companies tend to be more established and resilient during market fluctuations. However, the lack of small and micro-cap exposure may limit growth potential. To enhance diversification and growth prospects, consider adding smaller-cap stocks, which can offer higher returns despite their higher volatility.

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 may benefit from optimization using the Efficient Frontier, which identifies the best possible risk-return ratio for a given set of assets. This approach focuses on maximizing returns for a given level of risk or minimizing risk for a given level of return. By adjusting the allocation between existing assets, the portfolio can potentially achieve a more efficient balance. Regularly reviewing and rebalancing the portfolio in line with the Efficient Frontier can help maintain optimal performance and align with your risk tolerance and investment goals.

Ongoing product costs Info

  • iShares Physical Gold ETC 0.25%
  • Vanguard FTSE 100 UCITS GBP Acc 0.10%
  • Vanguard FTSE All-World UCITS ETF USD Accumulation 0.22%
  • Weighted costs total (per year) 0.20%

With a total expense ratio (TER) of 0.20%, the portfolio is cost-effective, which supports better long-term performance. Lower costs mean more of your investment returns stay in your pocket, compounding over time. This aligns well with best practices for passive investing, where keeping costs low is crucial. However, it's important to periodically review the TER as part of a comprehensive portfolio review. Ensuring that costs remain competitive and align with your investment strategy can help maximize returns and achieve financial goals.

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