A well-diversified global equity portfolio with strong historical performance and moderate risk

Report created on Jan 22, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio consists entirely of the Vanguard FTSE All-World UCITS ETF, which offers exposure to a wide range of global equities. This single ETF covers multiple sectors and geographic regions, making it broadly diversified. However, having 100% allocation in one ETF may limit flexibility in tailoring specific investment strategies. While this composition simplifies management and provides broad market exposure, consider whether additional asset types could enhance risk management and align with specific investment goals.

Growth Info

Historically, the portfolio has performed exceptionally well, with a Compound Annual Growth Rate (CAGR) of 13.00%. This indicates a strong average yearly growth, though it's important to remember that past performance does not predict future results. The maximum drawdown of -33.45% highlights potential volatility during market downturns. Comparing these figures to a benchmark can provide context on relative performance. Maintaining a long-term perspective is advisable to withstand short-term fluctuations.

Projection Info

Monte Carlo simulations, which use historical data to predict potential future outcomes, suggest a positive outlook for the portfolio. With simulations showing a 13.84% annualized return and 999 out of 1,000 simulations indicating positive returns, the portfolio is projected to perform well. However, remember that these are hypothetical scenarios and actual results may vary. Regularly reviewing projections can help adjust strategies as needed, considering market conditions and personal investment goals.

Asset classes Info

  • Stocks
    100%

The portfolio is entirely invested in stocks, which can offer high growth potential but also come with higher risk compared to bonds or other asset classes. This allocation aligns with a strategy seeking capital appreciation. However, for investors looking to reduce volatility, incorporating other asset classes like fixed income could provide a buffer against market fluctuations. Balancing stocks with other assets can enhance diversification and risk management.

Sectors Info

  • Technology
    27%
  • Financials
    17%
  • Consumer Discretionary
    11%
  • Health Care
    10%
  • Industrials
    10%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    3%
  • Utilities
    3%
  • Real Estate
    2%

The portfolio's sector allocation is heavily weighted towards technology at 27%, with financial services and consumer cyclicals following. This concentration in tech could lead to higher volatility, especially during interest rate changes. While this aligns with current market trends, consider whether this exposure matches your risk tolerance. A more balanced sector distribution could mitigate sector-specific risks and ensure a more stable performance across different market conditions.

Regions Info

  • North America
    67%
  • Europe Developed
    14%
  • Asia Emerging
    6%
  • Japan
    6%
  • Asia Developed
    4%
  • Australasia
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio leans heavily towards North America, comprising 67% of the allocation. While this has been advantageous given the strong performance of U.S. markets, it may expose the portfolio to regional risks. Including more exposure to emerging markets or underrepresented regions could enhance diversification and reduce reliance on a single economic area. This approach can provide a hedge against regional downturns and capture growth opportunities globally.

Market capitalization Info

  • Mega-cap
    47%
  • Large-cap
    35%
  • Mid-cap
    17%

The portfolio is predominantly invested in mega and big-cap stocks, which are typically stable and less volatile than smaller companies. This focus on large-cap stocks can offer steady returns but may limit growth potential compared to smaller, more dynamic companies. Diversifying into mid and small-cap stocks could increase growth opportunities and provide a more balanced risk-return profile. Consider whether this market cap distribution aligns with your investment objectives.

Ongoing product costs Info

  • Vanguard FTSE All-World UCITS ETF USD Accumulation 0.22%
  • Weighted costs total (per year) 0.22%

The total expense ratio (TER) of 0.22% for the Vanguard FTSE All-World UCITS ETF is impressively low, supporting better long-term performance. Low costs mean more of your investment compounds over time, enhancing returns. While this is a positive aspect of the portfolio, regularly reviewing costs can ensure they remain competitive. Consider other low-cost options if any changes in strategy or asset allocation occur, keeping expenses minimal.

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