A growth-oriented portfolio with high-tech exposure and limited geographic diversification

Report created on Jan 2, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio consists of two ETFs, each holding 37.5%, and two individual stocks, Microsoft and NVIDIA, each at 12.5%. This composition leans heavily towards equities, with a minor fraction in cash and other assets. Compared to common benchmarks, this portfolio is heavily focused on stock investments, which can drive high returns but also increase volatility. To enhance balance, consider diversifying into other asset classes like bonds or real estate, which can provide stability during market downturns.

Growth Info

Historically, the portfolio has delivered an impressive CAGR of 23.53%, significantly outperforming many equity benchmarks. However, it has also experienced a maximum drawdown of -32.54%, indicating substantial volatility. This performance highlights the potential for high returns, but also the risk of significant losses. Investors should be prepared for these fluctuations and consider strategies to mitigate downside risks, such as incorporating defensive assets or employing stop-loss measures.

Projection Info

Monte Carlo simulations, using historical data, project the portfolio's potential future outcomes. With an annualized return of 39.29% across simulations, the portfolio shows strong growth prospects. However, these projections are based on past data and do not guarantee future results. The wide range of outcomes, from a 5th percentile return of 729.42% to a 67th percentile of 9,724.02%, underscores the uncertainty. Investors should regularly review projections and adjust their strategies to align with changing market conditions and personal goals.

Asset classes Info

  • Stocks
    100%

The portfolio is overwhelmingly weighted towards stocks, accounting for over 99% of its composition. While this allocation can drive growth, it lacks the diversification benefits that other asset classes, like bonds or commodities, might offer. Compared to diversified benchmarks, this portfolio is more concentrated, which can lead to higher volatility. To enhance diversification, consider incorporating non-equity assets, which can help mitigate risks and provide more stable returns in varying market environments.

Sectors Info

  • Technology
    47%
  • Financials
    11%
  • Consumer Discretionary
    8%
  • Health Care
    8%
  • Telecommunications
    7%
  • Industrials
    6%
  • Consumer Staples
    4%
  • Energy
    3%
  • Basic Materials
    2%
  • Utilities
    2%
  • Real Estate
    2%

Technology dominates the sector allocation, making up over 47% of the portfolio, followed by financial services and consumer cyclicals. This concentration in tech can lead to higher volatility, especially during periods of regulatory changes or interest rate hikes. While tech has been a strong performer, balancing exposure across more sectors can reduce risk and capture opportunities in other industries. Consider reallocating some investments towards underrepresented sectors to achieve a more balanced sectoral distribution.

Regions Info

  • North America
    87%
  • Europe Developed
    6%
  • Asia Emerging
    2%
  • Japan
    2%
  • Asia Developed
    1%
  • Australasia
    1%

The portfolio's geographic exposure is heavily skewed towards North America, comprising nearly 87% of the total allocation. This concentration limits international diversification and exposes the portfolio to regional economic and political risks. Compared to global benchmarks, this portfolio is underexposed to emerging markets and other regions. To enhance geographic diversification, consider increasing exposure to regions like Asia, Europe, and Latin America, which can offer growth opportunities and reduce regional risk concentration.

Redundant positions Info

  • Vanguard FTSE All-World UCITS ETF USD Accumulation
    iShares Core S&P 500 UCITS ETF USD (Acc)
    High correlation

The portfolio's assets, particularly the two ETFs, are highly correlated, meaning they tend to move in tandem. This correlation can diminish diversification benefits, as similar assets may react similarly to market events. While correlation isn't inherently negative, it can limit risk reduction during downturns. Consider reducing overlap by diversifying into less correlated assets, which can help smooth portfolio volatility and provide a buffer during market corrections.

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.

While the portfolio is structured for growth, optimizing its risk-return profile using the Efficient Frontier could enhance performance. This approach identifies the best possible allocation of current assets to achieve the highest return for a given risk level. However, optimization is limited to existing assets and may not address diversification needs. Consider rebalancing the portfolio to optimize risk and return, ensuring it aligns with your investment goals and risk tolerance.

Ongoing product costs Info

  • iShares Core S&P 500 UCITS ETF USD (Acc) 0.12%
  • Vanguard FTSE All-World UCITS ETF USD Accumulation 0.22%
  • Weighted costs total (per year) 0.13%

The portfolio's total expense ratio (TER) is a low 0.13%, which is commendably efficient. Low costs are crucial for maximizing long-term returns, as they minimize the drag on performance. This cost efficiency aligns with best practices, ensuring more of the portfolio's returns are retained. While costs are well-managed, it's still advisable to periodically review and compare expenses with similar investment options to ensure continued cost-effectiveness.

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