A growth-oriented portfolio with a momentum focus and emerging market exposure
Report created on Jan 2, 2025Risk profile
4/7
Diversification profile
4/5
Positions
-
IW iShares Edge MSCI World Momentum Factor UCITS ETF
IWFM - IE00BP3QZ825 90.00% -
EX iShares MSCI EM ex China UCITS ETF USD Acc GBP
EXCS - IE00BMG6Z448 10.00%
The portfolio is heavily weighted towards the iShares Edge MSCI World Momentum Factor UCITS ETF, making up 90% of the total composition. This ETF focuses on global stocks with strong momentum, which can drive significant growth. The remaining 10% is allocated to the iShares MSCI EM ex China UCITS ETF, providing exposure to emerging markets outside China. This composition leans heavily towards equities, with minimal cash and other assets. While the portfolio is broadly diversified, the concentration in momentum-focused assets could lead to higher volatility compared to a more balanced asset allocation. Consider diversifying with additional asset classes to mitigate potential risks.
Growth
Historically, the portfolio has achieved a compound annual growth rate (CAGR) of 9.09%, indicating strong growth over time. However, it also experienced a maximum drawdown of -18.34%, reflecting potential volatility. Comparatively, a balanced benchmark might offer a more stable performance with less dramatic drawdowns. It's crucial to remember that past performance doesn't guarantee future results, and market conditions can change. To enhance stability, consider strategies to reduce drawdowns, such as incorporating more defensive assets or diversifying further across different investment styles.
Projection
The forward projection, based on 1,000 Monte Carlo simulations, suggests a broad range of potential outcomes. The median scenario projects a 130.21% portfolio value increase, while the 5th percentile indicates a possible loss of -5.29%. Monte Carlo simulations use historical data to model future possibilities, but they can't predict exact outcomes. The high number of simulations with positive returns (945) is encouraging, but it's important to maintain realistic expectations. To manage potential risks, regularly review and adjust the portfolio to align with evolving market conditions and personal investment goals.
Asset classes
- Stocks 99%
The portfolio is predominantly invested in stocks, accounting for over 99% of the allocation, with negligible holdings in cash and other assets. This focus on equities aligns with a growth-oriented strategy but may expose the portfolio to higher volatility. Compared to a typical balanced benchmark, which might include bonds and other asset classes, this portfolio is less diversified. To enhance risk management and reduce potential volatility, consider incorporating fixed income or alternative investments that can provide stability and income during market downturns.
Sectors
- Technology 29%
- Financials 22%
- Industrials 10%
- Telecommunications 9%
- Health Care 8%
- Consumer Staples 7%
- Consumer Discretionary 5%
- Utilities 4%
- Real Estate 2%
- Energy 2%
- Basic Materials 2%
The portfolio's sector allocation is notably concentrated, with significant exposure to technology (28.5%) and financial services (22.2%). This concentration can lead to increased volatility, especially if these sectors face downturns. While the portfolio includes 10 sectors, the heavy weighting in technology may result in higher sensitivity to interest rate changes and market sentiment. Diversifying further into underrepresented sectors, such as healthcare or consumer staples, could help balance the portfolio and mitigate sector-specific risks, ensuring a more stable performance across different market conditions.
Regions
- North America 74%
- Europe Developed 9%
- Asia Developed 4%
- Japan 4%
- Asia Emerging 3%
- Australasia 2%
- Africa/Middle East 2%
- Latin America 1%
Geographically, the portfolio is heavily skewed towards North America, which comprises 74.3% of the allocation. This concentration may limit exposure to growth opportunities in other regions. While developed markets like Europe and Japan are represented, emerging markets, excluding China, are underrepresented. This geographic focus can impact diversification and risk, especially if North American markets underperform. To achieve a more balanced global exposure, consider increasing allocations to emerging markets or other regions that may offer growth potential and diversification benefits.
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's current allocation could potentially be optimized using the Efficient Frontier, which identifies the best possible risk-return ratio for a given set of assets. This process involves adjusting the weights of existing assets to enhance returns for a given level of risk or reduce risk for a given return. While the portfolio is well-aligned with growth objectives, exploring optimization techniques can further refine its performance. Keep in mind that optimization focuses on current assets and allocation, and may not address diversification or other investment goals.
Ongoing product costs
- iShares MSCI EM ex China UCITS ETF USD Acc GBP 0.25%
- iShares Edge MSCI World Momentum Factor UCITS ETF 0.30%
- Weighted costs total (per year) 0.30%
The portfolio's total expense ratio (TER) is 0.3%, which is relatively low and supports better long-term performance by minimizing costs. Lower costs mean more of the returns are retained by the investor, enhancing compounding benefits over time. This cost efficiency is a positive aspect, aligning well with best practices for managing investment expenses. Regularly reviewing and comparing costs with other investment options can ensure that the portfolio remains competitive and cost-effective, maximizing the potential for achieving financial goals.
What next?
Create your own report?
Join our community!
The information provided on this platform is for informational purposes only and should not be considered as financial or investment advice. Insightfolio does not provide investment advice, personalized recommendations, or guidance regarding the purchase, holding, or sale of financial assets. The tools and content are intended for educational purposes only and are not tailored to individual circumstances, financial needs, or objectives.
Insightfolio assumes no liability for the accuracy, completeness, or reliability of the information presented. Users are solely responsible for verifying the information and making independent decisions based on their own research and careful consideration. Use of the platform should not replace consultation with qualified financial professionals.
Investments involve risks. Users should be aware that the value of investments may fluctuate and that past performance is not an indicator of future results. Investment decisions should be based on personal financial goals, risk tolerance, and independent evaluation of relevant information.
Insightfolio does not endorse or guarantee the suitability of any particular financial product, security, or strategy. Any projections, forecasts, or hypothetical scenarios presented on the platform are for illustrative purposes only and are not guarantees of future outcomes.
By accessing the services, information, or content offered by Insightfolio, users acknowledge and agree to these terms of the disclaimer. If you do not agree to these terms, please do not use our platform.
Instrument logos provided by Elbstream.
Help us improve Insightfolio
Your feedback makes a difference! Share your thoughts in our quick survey. Take the survey