A cautious portfolio with high diversification and strong focus on global equities

Report created on Jan 15, 2025

Risk profile Info

3/7
Cautious
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification

Positions

This portfolio is predominantly composed of ETFs, with a significant 80% allocation to the iShares Core MSCI World UCITS ETF. The remaining 20% is split equally between emerging markets and gold. This composition suggests a cautious approach, focusing on global equity exposure with a safety net in gold. Compared to typical benchmark portfolios, this structure is heavily weighted towards developed markets, offering a solid foundation for conservative growth. Consider diversifying further within equities or introducing a small bond component to enhance stability.

Growth Info

The portfolio has shown a commendable historic performance with a CAGR of 11.25%. This indicates a strong growth trajectory over time. However, the maximum drawdown of -13.95% reflects the potential for moderate losses during market downturns. While past performance doesn't guarantee future results, this historical data provides confidence in the portfolio's growth potential. Maintaining a balanced asset allocation can help weather future volatility.

Projection Info

Monte Carlo simulations, which use historical data to forecast future outcomes, indicate a promising outlook. With 1,000 simulations, the portfolio shows a median projection of 241.62% growth. The consistency of positive returns in 990 simulations underscores its stability. However, it's essential to remember that these projections are not guarantees. Regularly reviewing and adjusting the portfolio in response to market changes can help maintain its growth trajectory.

Asset classes Info

  • Stocks
    90%
  • Other
    10%

The portfolio's asset allocation is heavily skewed towards stocks, comprising nearly 90% of the total. This high equity exposure aligns with a growth-focused strategy but may increase volatility. The inclusion of gold provides a hedge against market downturns. Comparing to benchmarks, the portfolio lacks fixed income exposure, which could offer additional stability. Introducing a modest bond allocation might enhance risk management without significantly sacrificing returns.

Sectors Info

  • Technology
    24%
  • Financials
    15%
  • Consumer Discretionary
    10%
  • Health Care
    9%
  • Industrials
    9%
  • Telecommunications
    7%
  • Consumer Staples
    5%
  • Energy
    3%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    2%

The sector allocation is balanced, with a notable emphasis on technology at nearly 24%. This can drive growth but also introduce volatility, especially during periods of tech market corrections. The presence of other sectors like financial services and healthcare adds diversification. Compared to typical benchmarks, the portfolio's sector distribution is well-aligned, though it may benefit from a slight increase in defensive sectors to cushion against economic downturns.

Regions Info

  • North America
    61%
  • Europe Developed
    12%
  • Asia Emerging
    5%
  • Japan
    4%
  • Asia Developed
    4%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is heavily weighted towards North America, representing over 61% of the allocation. This focus on developed markets provides stability but may limit exposure to growth opportunities in emerging regions. While Europe and Asia have some presence, increasing allocations to underrepresented areas like Latin America or Africa could enhance diversification and capture potential growth. Aligning geographic exposure with global benchmarks can optimize risk and return.

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 can potentially be optimized on the Efficient Frontier, aiming for a higher expected return of 14.26% with the same risk level. This involves adjusting the current asset allocation to achieve the best possible risk-return ratio. While this doesn't guarantee diversification, it suggests reallocating within existing assets could enhance returns. Regularly revisiting this optimization can ensure the portfolio remains aligned with investment goals.

Ongoing product costs Info

  • iShares Core MSCI World UCITS ETF USD (Acc) 0.20%
  • iShares Core MSCI Emerging Markets IMI UCITS 0.18%
  • Weighted costs total (per year) 0.18%

The portfolio's total expense ratio (TER) of 0.18% is impressively low, supporting better long-term performance by minimizing costs. This aligns well with best practices for cost-efficient investing. Maintaining low fees is crucial for maximizing net returns over time. Regularly reviewing fund expenses and considering lower-cost alternatives can further optimize cost efficiency without sacrificing performance.

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