A broadly diversified portfolio with a cautious risk profile and moderate global exposure

Report created on Jan 10, 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 primarily composed of ETFs, with a heavy emphasis on global equities. The largest position is the Lyxor UCITS MSCI All Country World C-EUR, making up 40% of the portfolio, indicating a strong global focus. The remaining assets are distributed among European equities, Indian equities, consumer staples, and short-duration corporate bonds, with a small allocation to physical gold. This composition aligns with a cautious risk profile, balancing growth potential with stability. However, there is a notable concentration in equities, which may expose the portfolio to market volatility.

Growth Info

Historically, the portfolio has performed well, achieving a compound annual growth rate (CAGR) of 9.99%. This performance is impressive given its cautious risk classification, suggesting a well-balanced approach to growth and risk management. The maximum drawdown of -13.17% indicates resilience during market downturns, which is crucial for risk-averse investors. However, it's important to note that past performance does not predict future results, and market conditions can change. Monitoring performance against benchmarks can help ensure the portfolio remains aligned with investment goals.

Projection Info

Forward projections using Monte Carlo simulations indicate a promising outlook, with an annualized return of 11.19%. Monte Carlo simulations use historical data to estimate a range of potential outcomes, helping investors understand possible future performance. Notably, 998 out of 1,000 simulations resulted in positive returns, highlighting the portfolio's robustness. However, these projections are based on historical trends and assumptions, which may not hold true in the future. Regularly reviewing and adjusting the portfolio based on changing market conditions can help optimize outcomes.

Asset classes Info

  • Stocks
    90%
  • Other
    5%
  • Bonds
    5%

The portfolio's asset allocation is heavily skewed towards stocks, which account for nearly 90% of the total assets. This high equity exposure suggests a focus on capital growth, but it may also increase volatility. The remaining allocation includes bonds and other assets, providing some diversification. Compared to common benchmarks, this allocation is aggressive for a cautious profile. Consider increasing exposure to bonds or alternative assets to mitigate risk and smooth out returns, especially during market downturns.

Sectors Info

  • Technology
    16%
  • Consumer Staples
    15%
  • Financials
    15%
  • Industrials
    9%
  • Health Care
    9%
  • Consumer Discretionary
    9%
  • Telecommunications
    5%
  • Energy
    4%
  • Basic Materials
    4%
  • Utilities
    3%
  • Real Estate
    2%

Sector allocation is well-distributed, with significant exposure to technology, consumer defensive, and financial services. This diversification helps mitigate sector-specific risks and aligns with global market trends. However, the portfolio is slightly tech-heavy, which could lead to higher volatility during periods of interest rate hikes or regulatory changes. Balancing sector weights by considering underrepresented areas such as utilities or real estate could enhance diversification and reduce risk.

Regions Info

  • North America
    43%
  • Europe Developed
    28%
  • Asia Emerging
    12%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

Geographic exposure is concentrated in North America and Europe, which together account for over 70% of the portfolio. This aligns with global benchmarks but may limit exposure to emerging markets, which can offer higher growth potential. The portfolio's limited allocation to regions like Asia and Latin America suggests a conservative approach to geographic diversification. Exploring opportunities in underrepresented regions could enhance growth prospects and reduce reliance on developed markets.

Redundant positions Info

  • Amundi Index Solutions - Amundi S&P 500 UCITS ETF C EUR
    iShares MSCI ACWI UCITS ETF
    Lyxor UCITS MSCI All Country World C-EUR
    High correlation

The portfolio includes several highly correlated assets, such as the Amundi S&P 500 UCITS ETF and iShares MSCI ACWI UCITS ETF. High correlation means these assets tend to move together, which can reduce diversification benefits. During market downturns, correlated assets may not provide the desired risk mitigation. Consider replacing some overlapping assets with those that have lower correlation to improve diversification and potentially enhance returns while maintaining the current risk level.

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 benefit from optimization using the Efficient Frontier, which aims to achieve the best possible risk-return ratio with the current assets. The optimal portfolio has an expected return of 14.06%, significantly higher than the current expected return. By adjusting asset allocations, particularly addressing highly correlated assets, the portfolio can improve its efficiency. It's important to note that optimization focuses on the current asset set and allocation changes, not necessarily diversification or other goals.

Ongoing product costs Info

  • Amundi Index Solutions - Amundi S&P 500 UCITS ETF C EUR 0.15%
  • BNP Paribas Easy Stoxx Europe 600 UCITS ETF EUR C 0.18%
  • iShares $ Short Duration Corp Bond UCITS ETF USD (Dist) 0.20%
  • iShares MSCI ACWI UCITS ETF 0.20%
  • Multi Units France - Lyxor MSCI India UCITS ETF 0.85%
  • Lyxor UCITS MSCI All Country World C-EUR 0.45%
  • Xtrackers MSCI World Consumer Staples UCITS ETF 1C 0.25%
  • Weighted costs total (per year) 0.35%

The portfolio's total expense ratio (TER) is 0.35%, which is relatively low and supports better long-term performance by minimizing costs. Lower costs mean more of the portfolio's returns are retained by the investor, enhancing compounding effects over time. The highest TER is associated with the Lyxor MSCI India UCITS ETF at 0.85%. Consider evaluating whether lower-cost alternatives could achieve similar exposure without sacrificing performance. Regularly reviewing and optimizing costs is a key strategy for maximizing returns.

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