A balanced portfolio with strong global equity exposure and moderate risk tolerance

Report created on Jan 12, 2025

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

Positions

The portfolio consists of six ETFs, with a notable emphasis on global and U.S. equities. It allocates 30% to the Vanguard FTSE All-World UCITS ETF, providing broad global exposure, while 20% is invested in the iShares Core S&P 500 UCITS ETF, focusing on large-cap U.S. stocks. The remaining allocations are divided among the NASDAQ 100, emerging markets, world quality factor, and small-cap ETFs. This composition leans heavily towards equities, which is typical for a balanced profile but may lack diversification across other asset classes like bonds or commodities. Consider a modest allocation to fixed-income assets to mitigate potential equity market volatility.

Growth Info

Historically, the portfolio has performed well, with a CAGR of 14.02%, indicating strong growth over time. However, it's important to note the max drawdown of -32.64%, which highlights potential vulnerability during market downturns. This performance is impressive compared to typical benchmarks, suggesting effective asset selection. While past performance is a positive indicator, remember that it doesn't guarantee future results. To manage risks, it's wise to periodically review asset allocations and adjust based on changing market conditions and personal risk tolerance.

Projection Info

Forward projections using Monte Carlo simulations, which use historical data to predict future outcomes, suggest a wide range of potential returns. The median (50th percentile) projection is a substantial 499.9% over the investment horizon. However, the 5th percentile shows a much lower return of 85.91%, indicating potential downside risks. While these simulations provide useful scenarios, they rely on past data and assumptions, which may not fully capture future market dynamics. Regularly reassessing assumptions and diversifying further can help manage uncertainty.

Asset classes Info

  • Stocks
    100%

The portfolio is almost entirely composed of equities, with a negligible allocation to cash and other classes. This heavy stock concentration offers growth potential but also heightens exposure to market volatility. A more diversified allocation, incorporating fixed-income securities, could reduce risk and provide more stable returns. While equities drive growth, bonds offer a safety net during downturns. Consider introducing a small percentage of bonds to balance risk and return, enhancing the portfolio's resilience against market fluctuations.

Sectors Info

  • Technology
    29%
  • Financials
    14%
  • Consumer Discretionary
    12%
  • Telecommunications
    9%
  • Industrials
    9%
  • Health Care
    8%
  • Consumer Staples
    6%
  • Basic Materials
    4%
  • Energy
    4%
  • Utilities
    3%
  • Real Estate
    3%

Sector allocation is diverse, with a significant 29.24% in technology, followed by financial services and consumer cyclicals. While this tech-heavy focus aligns with current growth trends, it may lead to higher volatility, especially during periods of interest rate changes or regulatory shifts. The balance across other sectors like healthcare and industrials provides some stability. To maintain a well-rounded portfolio, consider monitoring sector performance and adjusting allocations as needed to avoid overexposure to any single sector's risks.

Regions Info

  • North America
    69%
  • Asia Emerging
    11%
  • Europe Developed
    8%
  • Asia Developed
    4%
  • Japan
    3%
  • Africa/Middle East
    2%
  • Latin America
    1%
  • Australasia
    1%

Geographically, the portfolio is heavily weighted towards North America, representing 68.67% of the allocation. While this aligns with the strength of U.S. markets, it may limit exposure to growth opportunities in other regions. The remaining allocations to emerging markets and developed Asia offer some diversification. To enhance global diversification, consider increasing exposure to underrepresented regions like Europe or Latin America. This broader geographic spread can help manage regional risks and capitalize on global growth trends.

Redundant positions Info

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

Several assets in the portfolio, such as the iShares MSCI World Quality Factor UCITS and iShares Core S&P 500 UCITS ETF, show high correlation. This means these assets tend to move in tandem, reducing the diversification benefits during market downturns. While some correlation is expected, excessive overlap can undermine risk management. To improve diversification, consider replacing some highly correlated assets with alternatives that provide exposure to different market segments or asset classes, enhancing overall portfolio resilience.

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 seeks the best possible risk-return ratio. However, before optimizing, focus on eliminating overlapping, highly correlated assets that don't add diversification value. The Efficient Frontier doesn't guarantee diversification but helps balance risk and return within the existing asset mix. By adjusting allocations among current holdings, you can potentially enhance performance without significantly altering the portfolio's risk profile. This strategic realignment can lead to more efficient capital utilization.

Ongoing product costs Info

  • iShares MSCI World Quality Factor UCITS 0.30%
  • iShares MSCI World Small Cap UCITS ETF USD (Acc) 0.35%
  • iShares Core S&P 500 UCITS ETF USD (Acc) 0.12%
  • iShares NASDAQ 100 UCITS ETF USD (Acc) 0.36%
  • Vanguard FTSE Emerging Markets UCITS ETF USD Accumulation 0.22%
  • Vanguard FTSE All-World UCITS ETF USD Accumulation 0.22%
  • Weighted costs total (per year) 0.24%

The portfolio's total expense ratio (TER) is 0.24%, which is quite competitive and supports better long-term performance by minimizing costs. The individual costs of ETFs range from 0.12% to 0.36%, with most being relatively low. Keeping costs in check is crucial as high fees can erode returns over time. Regularly reviewing and comparing expense ratios can ensure cost-efficiency. Consider replacing any high-fee assets with lower-cost alternatives, maintaining the portfolio's cost-effectiveness without sacrificing performance.

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