A balanced portfolio with global exposure and a focus on equity growth

Report created on Dec 27, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification

Positions

The portfolio consists of two ETFs, with 85% allocated to the Vanguard FTSE All-World UCITS ETF and 15% to the iShares Treasury Bond 20+ UCITS. This composition leans heavily towards equities, reflecting a growth-oriented strategy with a significant portion in global stocks. Compared to typical balanced portfolios, which often have a more even split between equities and bonds, this portfolio is more aggressive. To align with a balanced risk profile, consider gradually increasing bond exposure to mitigate potential equity market volatility.

Growth Info

Historically, the portfolio has achieved a compound annual growth rate (CAGR) of 10.6%. This performance is impressive, especially considering the maximum drawdown of -26.52%, which indicates significant volatility. For context, a balanced benchmark might typically experience lower growth but also less severe drawdowns. While past performance is no guarantee of future results, maintaining a diversified approach can help smooth out volatility over time. Consider rebalancing periodically to maintain desired risk levels and capture gains.

Projection Info

Using Monte Carlo simulations, the portfolio's potential outcomes show a median (50th percentile) return of 80.75% and a conservative (5th percentile) loss of -37.28%. These simulations use historical data to estimate future possibilities but are not definitive predictions. With 808 out of 1,000 simulations showing positive returns, the outlook is generally optimistic. To manage expectations, focus on the median scenario and remain prepared for variability. Regular reviews can help adjust strategies to align with evolving market conditions.

Asset classes Info

  • Stocks
    85%
  • Bonds
    15%

The portfolio's asset allocation is heavily weighted towards stocks at approximately 85%, with bonds making up around 15%. This allocation is more aggressive than typical balanced portfolios, which might have a closer to 60/40 split between stocks and bonds. The high equity exposure suggests an emphasis on growth, potentially leading to higher volatility. To enhance diversification and reduce risk, consider increasing bond holdings or exploring other asset classes like real estate or commodities.

Sectors Info

  • Technology
    22%
  • Financials
    14%
  • Health Care
    9%
  • Consumer Discretionary
    9%
  • Industrials
    8%
  • Telecommunications
    7%
  • Consumer Staples
    5%
  • Energy
    3%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    2%

Sector allocation is diverse, with technology comprising the largest share at 21.8%, followed by financial services and healthcare. This distribution aligns with global equity benchmarks, providing broad exposure across industries. However, the tech-heavy allocation might lead to increased volatility, especially during market corrections or interest rate hikes. To mitigate sector-specific risks, consider rebalancing to ensure no single sector dominates excessively and maintain a balanced approach across industries.

Regions Info

  • North America
    56%
  • Europe Developed
    12%
  • Asia Emerging
    5%
  • Japan
    5%
  • Asia Developed
    3%
  • Australasia
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is heavily weighted towards North America, accounting for 55.7% of the allocation, followed by Europe Developed and Asia Emerging. This distribution reflects a typical global equity focus, but there's a notable underrepresentation in regions like Latin America and Africa/Middle East. While North American markets offer stability and growth, diversifying into underrepresented regions could enhance potential returns and reduce regional risk exposure. Regularly review geographic allocations to align with global economic trends.

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 is moderately optimized along the Efficient Frontier, which seeks the best risk-return ratio given the current assets. This means the portfolio is likely achieving a reasonable balance between risk and return. However, optimization is based solely on existing assets and their allocations. To potentially enhance efficiency, consider exploring other asset classes or adjusting current allocations. Regular portfolio reviews can help ensure it remains aligned with personal risk tolerance and market conditions.

Dividends Info

  • iShares Treasury Bond 20+ UCITS 4.90%
  • Weighted yield (per year) 0.74%

The portfolio's dividend yield is 0.74%, primarily driven by the iShares Treasury Bond 20+ UCITS with a yield of 4.9%. While the overall yield is modest, dividends can provide a steady income stream, especially in volatile markets. For investors seeking income, consider increasing exposure to dividend-focused funds or equities. However, for those prioritizing growth, reinvesting dividends can compound returns over time. Regularly assess dividend contributions to ensure they align with financial goals.

Ongoing product costs Info

  • iShares Treasury Bond 20+ UCITS 0.10%
  • Vanguard FTSE All-World UCITS ETF USD Accumulation 0.22%
  • Weighted costs total (per year) 0.20%

The portfolio's total expense ratio (TER) is 0.2%, which is quite low and beneficial for long-term performance. Lower costs mean more of your returns stay in your pocket, enhancing compounding over time. This aligns well with best practices for cost efficiency in investing. To maintain this advantage, periodically review the TER of current holdings and consider replacing higher-cost options with similar lower-cost alternatives, ensuring cost-effectiveness remains a priority in portfolio management.

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