A growth-focused portfolio with strong tech exposure and high geographic concentration in North America
Report created on Jan 1, 2025Risk profile
5/7
Diversification profile
3/5
Positions
-
EU iShares Core MSCI World UCITS ETF USD (Acc)
EUNL - IE00B4L5Y983 40.00% -
VU Vanguard S&P 500 UCITS Acc
VUAA - IE00BFMXXD54 40.00% -
ZP SPDR S&P U.S. Technology Select Sector UCITS
ZPDT - IE00BWBXM948 20.00%
The portfolio is composed of three ETFs, with significant allocations to the iShares Core MSCI World and Vanguard S&P 500, each at 40%, and the SPDR S&P U.S. Technology Select Sector at 20%. This structure reflects a heavy emphasis on global and U.S. equities, characteristic of a growth-focused strategy. Compared to common benchmark compositions, this portfolio is heavily weighted in equities, suggesting a higher risk tolerance. To enhance diversification, consider incorporating additional asset classes, such as bonds or real estate, to balance the equity dominance.
Growth
Historically, the portfolio has performed well, with a Compound Annual Growth Rate (CAGR) of 15.91%. This impressive growth indicates strong past performance, especially when compared to typical market benchmarks. However, it also experienced a maximum drawdown of -33.17%, highlighting significant volatility. While past performance is a useful indicator, it's important to remember that it doesn't guarantee future results. To mitigate potential future downturns, consider strategies that reduce volatility, such as diversifying across more asset classes or sectors.
Projection
Forward projections using Monte Carlo simulations provide a range of potential outcomes based on historical data. With 1,000 simulations, the portfolio shows a 50th percentile return of 776.35%, indicating robust expected growth. However, the 5th percentile return of 169.46% underscores the inherent uncertainty and risk. While simulations offer valuable insights, they rely on historical data, which cannot predict future market conditions. To prepare for different scenarios, consider stress testing your portfolio under various economic conditions to ensure resilience.
Asset classes
- Stocks 100%
The portfolio is heavily concentrated in stocks, comprising 99.87% of the total, with minimal exposure to cash and other asset classes. This allocation suggests a focus on growth, but it also increases risk due to limited diversification. Compared to benchmark norms, which typically include a mix of equities, bonds, and other assets, this portfolio could benefit from broader diversification. To reduce risk, consider adding fixed-income securities or alternative investments, which can provide stability during market volatility.
Sectors
- Technology 44%
- Financials 12%
- Consumer Discretionary 9%
- Health Care 8%
- Industrials 7%
- Telecommunications 7%
- Consumer Staples 5%
- Energy 3%
- Utilities 2%
- Basic Materials 2%
- Real Estate 2%
Sector allocation reveals a significant concentration in technology, which makes up 43.85% of the portfolio. While this can drive growth, it also exposes the portfolio to sector-specific risks, such as regulatory changes or market saturation. Compared to benchmarks, this portfolio is tech-heavy, which can lead to higher volatility, especially during interest rate hikes. To achieve a more balanced sector allocation, consider increasing exposure to underrepresented sectors like utilities or consumer defensive, which can provide stability.
Regions
- North America 90%
- Europe Developed 6%
- Japan 2%
- Australasia 1%
Geographically, the portfolio is heavily concentrated in North America, accounting for 90.25% of the total allocation. This focus on a single region limits geographic diversification and exposes the portfolio to region-specific risks, such as economic downturns or political instability. Compared to common benchmarks, which typically include broader geographic exposure, this portfolio could benefit from increased diversification. Consider adding investments in emerging markets or other regions to reduce regional risk and capture global growth opportunities.
Redundant positions
-
High correlationVanguard S&P 500 UCITS AcciShares Core MSCI World UCITS ETF USD (Acc)
The portfolio includes highly correlated assets, particularly the Vanguard S&P 500 and iShares Core MSCI World ETFs. High correlation means these assets tend to move together, limiting diversification benefits during market downturns. While correlated assets can provide consistent returns in stable markets, they may increase overall portfolio risk during volatility. To enhance diversification, consider replacing one of the correlated ETFs with an asset that has a lower correlation, such as a bond or a sector-specific ETF that complements the existing holdings.
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 be optimized using the Efficient Frontier concept, which seeks the best possible risk-return ratio. Currently, the overlapping assets limit diversification benefits, suggesting room for improvement. By adjusting the allocation between existing assets or incorporating new ones, you can enhance efficiency. Remember, optimization focuses on achieving the best risk-return balance, not necessarily diversification. To optimize, consider reallocating funds from highly correlated assets to those that offer complementary risk profiles, maximizing the portfolio's potential.
Ongoing product costs
- iShares Core MSCI World UCITS ETF USD (Acc) 0.20%
- Vanguard S&P 500 UCITS Acc 0.07%
- SPDR S&P U.S. Technology Select Sector UCITS 0.15%
- Weighted costs total (per year) 0.14%
The portfolio's Total Expense Ratio (TER) is 0.14%, which is impressively low and supports better long-term performance by minimizing costs. Low costs are crucial for maximizing returns, as they reduce the drag on portfolio growth over time. Compared to industry averages, this portfolio is cost-efficient, allowing more of your investment to compound over the years. To maintain this advantage, regularly review your holdings to ensure they continue to offer competitive expense ratios, and consider switching to lower-cost alternatives if available.
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