Balanced portfolio with a cautious profile focusing on stocks and bonds

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

Cautious Investors

This portfolio is well-suited for an investor with a moderate risk tolerance seeking balanced growth over a medium to long-term horizon. It's designed for those who prefer a cautious approach, emphasizing stability and income generation alongside capital appreciation. Ideal for individuals looking to build wealth steadily while managing risk exposure through diversification across asset classes and geographies.

Positions

  • SPDR® S&P 500 UCITS ETF
    SPX5 - IE00B6YX5C33
    35.00%
  • iShares III Public Limited Company - iShares Global Aggregate Bond UCITS ETF
    AGBP - IE00BF540Y54
    30.00%
  • Vanguard FTSE Developed Europe UCITS
    VEUR - IE00B945VV12
    26.25%
  • Vanguard FTSE Emerging Markets UCITS
    VFEM - IE00B3VVMM84
    8.75%

This portfolio is structured with a 70% allocation to stocks and 30% to bonds, indicating a balanced approach with a tilt towards growth while maintaining a cushion against market volatility through fixed income assets. The inclusion of ETFs targeting the S&P 500, global bonds, developed Europe, and emerging markets suggests a strategic attempt to diversify across geographies and asset classes. However, the absence of alternative investments and the moderate diversification score reflect room for broadening the asset base to enhance risk management.

Growth Info

Historically, this portfolio has achieved a Compound Annual Growth Rate (CAGR) of 7.81%, with a maximum drawdown of -18.80%. This performance, characterized by a significant recovery from its lowest point, underscores the portfolio's resilience and the benefits of its diversified structure. The days contributing to 90% of returns indicate concentrated periods of significant gains, highlighting the importance of staying invested through market cycles for achieving long-term growth.

Projection Info

Monte Carlo simulations, employing historical data to forecast future outcomes, suggest a wide range of potential portfolio values. With 937 out of 1,000 simulations yielding positive returns, the portfolio demonstrates a strong likelihood of growth. The 50th percentile projection of 136.7% growth underscores a reasonable expectation for future performance, though investors should remember that these projections are hypothetical and cannot guarantee future results.

Asset classes Info

  • Stocks
    70%
  • Bonds
    30%
  • Cash
    0%
  • Other
    0%
  • No data
    0%

With 70% in stocks and 30% in bonds, the portfolio aligns with a balanced growth strategy suitable for a cautious investor. This allocation supports the pursuit of growth through equities while using bonds to mitigate risk, reflecting a well-considered approach to achieving long-term financial goals. Adjusting this mix could further tailor the portfolio to specific risk tolerances or investment horizons.

Sectors Info

  • Technology
    15%
  • Financials
    13%
  • Health Care
    8%
  • Industrials
    8%
  • Consumer Discretionary
    7%
  • Telecommunications
    5%
  • Consumer Staples
    5%
  • Energy
    3%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    1%

The sectoral allocation, led by technology, financial services, and healthcare, mirrors broader market trends and offers exposure to areas with potential for growth and innovation. However, the concentration in these sectors might expose the portfolio to sector-specific risks. Diversifying across additional sectors or reducing concentrations could help in managing these risks more effectively.

Regions Info

  • North America
    35%
  • Europe Developed
    26%
  • Asia Emerging
    5%
  • Asia Developed
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%
  • Europe Emerging
    0%

Geographic distribution emphasizes North America and developed Europe, with a modest allocation to emerging markets. This reflects a cautious approach to international exposure, balancing the stability of developed markets with the growth potential of emerging economies. To enhance global diversification, considering a slight increase in emerging markets or underrepresented regions might be beneficial.

Market capitalization Info

  • Mega-cap
    34%
  • Large-cap
    24%
  • Mid-cap
    11%
  • Small-cap
    0%
  • Micro-cap
    0%

The focus on mega and big cap stocks reinforces the portfolio's cautious profile, as these companies typically offer stability and resilience in volatile markets. However, the absence of small and micro-cap investments limits exposure to high-growth potential sectors. Introducing a small allocation to smaller caps could enhance growth prospects without significantly increasing overall risk.

Dividends Info

  • Vanguard FTSE Developed Europe UCITS 2.10%
  • Weighted yield (per year) 0.55%

The dividend yield, particularly from the Vanguard FTSE Developed Europe UCITS ETF, contributes to the portfolio's income generation, complementing capital gains. In a cautious investment strategy, dividends can provide a steady income stream and mitigate volatility. Reinvesting dividends or focusing on higher-yielding assets could further enhance portfolio growth over time.

Ongoing product costs Info

  • iShares III Public Limited Company - iShares Global Aggregate Bond UCITS ETF 0.10%
  • SPDR® S&P 500 UCITS ETF 0.03%
  • Vanguard FTSE Developed Europe UCITS 0.10%
  • Vanguard FTSE Emerging Markets UCITS 0.22%
  • Weighted costs total (per year) 0.09%

The portfolio's total expense ratio (TER) of 0.09% is impressively low, maximizing the potential for net returns. Keeping costs low is crucial for long-term investment success, as fees compound over time, eroding returns. This portfolio exemplifies cost-effective investing, which is particularly important for a cautious investment strategy seeking steady growth.

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.

Optimizing the portfolio using the Efficient Frontier could improve the risk-return profile, potentially offering higher returns for the same level of risk. This optimization, based on current assets and potential reallocation, aims to achieve the most efficient balance. Regularly reviewing and adjusting the portfolio in response to changing market conditions and investment goals can help maintain this optimal balance.

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