A cautious portfolio emphasizing global equity with a strong focus on developed markets

Report created on Jan 14, 2025

Risk profile Info

3/7
Cautious
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification

Positions

The portfolio is heavily weighted towards global equities, with 80% in the iShares Core MSCI World UCITS ETF. This fund provides broad exposure to developed market stocks, a common choice for cautious investors seeking stability. The inclusion of 15% in iShares Physical Gold ETC adds a layer of security, acting as a hedge against market volatility. The 5% allocation to emerging markets through iShares Core MSCI Emerging Markets IMI UCITS offers a modest growth opportunity. While this composition aligns with a cautious profile, it could benefit from slightly increasing exposure to bonds for added stability.

Growth Info

Historically, the portfolio has shown a strong Compound Annual Growth Rate (CAGR) of 11.97%, indicating robust performance. This growth rate surpasses many conservative benchmarks, reflecting the strength of developed market equities. However, the maximum drawdown of -12.92% suggests potential vulnerability during market downturns. Understanding that past performance does not guarantee future results, it’s crucial to consider how this historical context aligns with your risk tolerance and investment goals. Maintaining a balance between growth and risk is key to sustaining long-term performance.

Projection Info

The Monte Carlo simulation, a method that uses historical data to project future outcomes, suggests a positive outlook for the portfolio. With 985 out of 1,000 simulations yielding positive returns, the median outcome projects a 249.77% increase. While these projections offer a promising glimpse into potential future returns, it’s essential to remember that they are based on historical data and assumptions. This means actual future performance can differ. Regularly reviewing projections and adjusting the portfolio as needed can help manage expectations and align with investment goals.

Asset classes Info

  • Stocks
    85%
  • Other
    15%

The portfolio is primarily composed of stocks, making up 84.71% of the allocation, with a smaller portion in gold ETFs at 15%. This allocation leans heavily towards equities, which can offer growth but may also introduce volatility. The absence of significant bond exposure might limit the portfolio’s ability to cushion against market fluctuations. For a cautious investor, introducing more fixed-income assets could enhance stability and provide a more balanced risk-return profile. This adjustment could help mitigate potential losses during periods of market stress.

Sectors Info

  • Technology
    23%
  • Financials
    13%
  • Consumer Discretionary
    9%
  • Health Care
    9%
  • Industrials
    8%
  • Telecommunications
    7%
  • Consumer Staples
    5%
  • Energy
    3%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    2%

The portfolio's sector allocation is tech-heavy, with 22.73% in technology, followed by financial services and consumer cyclicals. This concentration in technology could lead to higher volatility, especially during periods of interest rate changes or tech market corrections. While the diversification across sectors is commendable, ensuring that no single sector dominates excessively is crucial. Monitoring sector trends and adjusting allocations can help manage risk and capitalize on emerging opportunities. A more balanced sector approach can enhance the portfolio’s resilience.

Regions Info

  • North America
    61%
  • Europe Developed
    12%
  • Japan
    4%
  • Asien Schwellenländer
    3%
  • Asien
    2%
  • Australasia
    1%
  • Afrika/Mittlerer Osten
    1%

Geographically, the portfolio is predominantly exposed to North America, which accounts for 61.31% of the allocation. This heavy focus on developed markets, particularly the U.S., aligns with the cautious investment profile but may miss opportunities in other regions. While developed markets offer stability, diversifying further into emerging markets could provide additional growth potential. Regularly assessing geographic exposure and considering strategic shifts can help balance risk and return, ensuring alignment with global economic trends and personal investment goals.

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 be optimized using the Efficient Frontier, which identifies the best possible risk-return ratio. Currently, the portfolio's expected return is below the optimal level, suggesting room for improvement. By adjusting asset allocations, it's possible to achieve a higher expected return without increasing risk. This optimization process involves analyzing current assets and reallocating them to enhance efficiency. Regularly revisiting the portfolio’s composition and making strategic adjustments can help achieve a more favorable balance between risk and return.

Ongoing product costs Info

  • iShares Core MSCI World UCITS ETF USD (Acc) 0.20%
  • iShares Core MSCI Emerging Markets IMI UCITS 0.18%
  • Weighted costs total (per year) 0.17%

The portfolio benefits from low costs, with a Total Expense Ratio (TER) of 0.17%. Low fees are advantageous as they maximize net returns over time, aligning with best practices for cost-efficient investing. Keeping expenses minimal is crucial for long-term growth, as high fees can erode returns. Evaluating cost structures periodically and exploring opportunities to reduce fees further can enhance performance. This focus on cost efficiency supports the portfolio’s overall strategy, ensuring that more of your investment contributes to growth.

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