A balanced global portfolio with a strong US focus and low-cost structure

Report created on Feb 2, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio is composed of seven ETFs, with a significant 60% allocation to the Vanguard S&P 500 UCITS ETF. This indicates a strong tilt towards the US market. The remaining 40% is diversified across global regions including Europe, Japan, emerging markets, and Canada. This composition aligns with a balanced approach, offering broad diversification. However, the heavy reliance on the US market may introduce concentration risk. To mitigate this, consider slightly increasing allocations to other regions, enhancing global diversification and potentially smoothing returns during US market downturns.

Growth Info

Historically, the portfolio has performed well, with a CAGR of 18.65%, indicating strong growth over time. The max drawdown of -24.71% suggests the portfolio has experienced significant volatility, which is typical for equity-heavy investments. Compared to a benchmark like the S&P 500, this performance is commendable. However, past performance is not a guarantee of future results. It's crucial to maintain a long-term perspective and be prepared for potential downturns, ensuring the portfolio aligns with your risk tolerance.

Projection Info

Using Monte Carlo simulations, this portfolio's potential outcomes were projected across 1,000 scenarios. The median (50th percentile) outcome suggests a robust 493.6% growth, while the 5th percentile indicates a more modest 52% growth. This illustrates the range of possible future returns, highlighting both potential upside and downside. While these simulations provide a useful glimpse into future possibilities, they rely on historical data and assumptions, which may not fully capture future market dynamics. Regularly reviewing and adjusting the portfolio can help navigate these uncertainties.

Asset classes Info

  • Stocks
    100%

The portfolio is entirely composed of equities, which can offer high growth potential but also increased volatility. This 100% stock allocation is typical for investors seeking substantial growth, but it lacks the stability that bonds and other asset classes can provide. Diversifying into other asset classes, such as bonds, could enhance stability and potentially reduce drawdowns during market downturns. This shift would cater to those seeking a more balanced risk-return profile, especially if nearing retirement or other financial goals.

Sectors Info

  • Technology
    24%
  • Financials
    17%
  • Consumer Discretionary
    11%
  • Industrials
    11%
  • Health Care
    10%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    4%
  • Utilities
    3%
  • Real Estate
    2%

The portfolio's sector allocation reveals a significant concentration in technology (24%) and financial services (17%), which aligns with common benchmarks. This concentration can drive growth during tech booms but may also lead to volatility during sector-specific downturns. A more balanced sector allocation could mitigate this risk. Consider introducing exposure to underrepresented sectors like utilities or real estate, which often provide stability during economic cycles, balancing the higher volatility of tech-heavy investments.

Regions Info

  • North America
    61%
  • Europe Developed
    18%
  • Japan
    9%
  • Asia Emerging
    4%
  • Asia Developed
    4%
  • Australasia
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is heavily weighted towards North America (61%), with notable exposures to Europe and Japan. This allocation reflects a common bias towards developed markets, offering stability and growth potential. However, the limited exposure to emerging markets and other regions could restrict growth opportunities. Increasing exposure to these areas could enhance diversification and capture potential high-growth opportunities. This strategy could also reduce dependency on the US market, potentially smoothing returns over time.

Market capitalization Info

  • Mega-cap
    48%
  • Large-cap
    35%
  • Mid-cap
    17%

The portfolio is predominantly invested in large-cap stocks, with 48% in mega-cap and 35% in big-cap companies. This focus on larger companies typically provides stability and steady growth, as these firms are often market leaders with established business models. However, incorporating more mid-cap and small-cap stocks could enhance growth potential and diversification. While larger companies offer stability, smaller companies can provide higher growth opportunities, albeit with increased risk.

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 could potentially be optimized using the Efficient Frontier, which seeks the best possible risk-return ratio. This involves adjusting the current asset allocation to achieve an optimal balance. While the portfolio is already diversified, exploring small shifts in allocation could enhance efficiency. This doesn't necessarily mean adding new assets but rather reallocating among existing ones to improve the overall risk-return profile, ensuring alignment with investment goals.

Dividends Info

  • Vanguard FTSE Developed Asia Pacific ex Japan UCITS 2.20%
  • Vanguard FTSE Developed Europe ex UK UCITS 2.60%
  • Vanguard FTSE Japan UCITS 1.20%
  • Vanguard S&P 500 UCITS ETF 0.60%
  • Weighted yield (per year) 0.84%

The portfolio's dividend yield stands at 0.84%, which is relatively modest. This reflects a focus on growth rather than income. For investors seeking income, this yield may not suffice. Increasing allocations to higher-yielding ETFs or incorporating dividend-focused funds could enhance income generation. However, it's essential to balance the desire for income with growth objectives, ensuring the portfolio continues to align with long-term goals.

Ongoing product costs Info

  • HSBC MSCI Canada UCITS ETF 0.35%
  • Vanguard FTSE Developed Asia Pacific ex Japan UCITS 0.15%
  • Vanguard FTSE Developed Europe ex UK UCITS 0.10%
  • Vanguard FTSE Emerging Markets UCITS 0.22%
  • Vanguard FTSE Japan UCITS 0.15%
  • Vanguard FTSE 100 UCITS GBP Inc 0.10%
  • Vanguard S&P 500 UCITS ETF 0.07%
  • Weighted costs total (per year) 0.10%

The portfolio's total expense ratio (TER) of 0.10% is impressively low, enhancing long-term returns by minimizing costs. Low fees are crucial for maximizing investment growth, as they compound over time. This cost efficiency is a strong advantage, aligning with best practices in portfolio management. Continually monitoring and comparing fees across similar products can ensure the portfolio remains cost-effective, supporting better overall performance.

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