A globally diversified single ETF portfolio with a focus on large-cap equities

Report created on Jan 30, 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 is composed entirely of the Vanguard FTSE All-World UCITS ETF, representing a 100% allocation to this single ETF. This ETF provides broad exposure to global equities, encompassing a wide range of sectors and geographic regions. While the portfolio is broadly diversified within the ETF itself, it lacks diversification across different asset types like bonds or commodities. This concentrated allocation might be suitable for investors seeking simplicity and global equity exposure, but it also means that the portfolio's performance is entirely dependent on the equity markets' movements.

Growth Info

Historically, the portfolio has delivered a strong Compound Annual Growth Rate (CAGR) of 13.03%, reflecting robust equity market performance over the past years. However, it also experienced a significant maximum drawdown of -33.45%, indicating vulnerability to market volatility. Comparing this to a benchmark like the MSCI World Index can provide context on how well the ETF has performed relative to global markets. Investors should consider whether they are comfortable with the potential for similar drawdowns in the future, as past performance is not indicative of future results.

Projection Info

The forward projection using Monte Carlo simulations reveals a wide range of potential outcomes. With 1,000 simulations, the median expected return is 456.1%, while the 5th percentile suggests a more conservative 92.7% return. The annualized return across simulations is 14.02%, indicating a generally positive outlook. However, it's crucial to acknowledge that these projections are based on historical data, which may not account for future market shifts. Investors should use these projections as one of many tools in assessing potential risks and returns.

Asset classes Info

  • Stocks
    100%

The portfolio is exclusively invested in stocks, with no allocation to other asset classes like bonds or real estate. This lack of asset class diversification can lead to higher volatility, as the portfolio is fully exposed to equity market movements. While this allocation might be suitable for growth-oriented investors, those seeking stability might consider diversifying into other asset classes. Comparing the asset class allocation to a balanced benchmark could highlight potential areas for diversification to reduce risk.

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 led by technology at 27%, followed by financial services at 17%. This concentration in technology may introduce higher volatility, especially during periods of regulatory changes or interest rate fluctuations. On the positive side, the sector allocation is broadly diversified across 11 sectors, which aligns well with global benchmarks. Investors should monitor sector trends and consider whether the current allocation aligns with their risk tolerance and market outlook.

Regions Info

  • North America
    67%
  • Europe Developed
    14%
  • Asien Schwellenländer
    6%
  • Japan
    6%
  • Asien
    4%
  • Australasia
    2%
  • Afrika/Mittlerer Osten
    1%
  • Latin America
    1%

Geographically, the portfolio is heavily weighted towards North America at 67%, with lesser exposures to Europe and Asia. This overweight in North America could be beneficial if the region continues to outperform, but it also increases vulnerability to regional economic downturns. Compared to global benchmarks, there is a notable underweight in emerging markets, which might limit growth potential. Investors seeking more balanced geographic exposure might consider increasing allocations to regions like Asia or Latin America.

Market capitalization Info

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

The portfolio is predominantly invested in large-cap companies, with 47% in mega caps and 35% in big caps. This focus on larger companies can provide stability and lower volatility compared to small or micro-cap stocks. However, it may also limit growth potential, as smaller companies often have higher growth prospects. Investors might consider whether they are comfortable with this focus on large-cap stocks or if they wish to explore opportunities in smaller-cap companies for potential higher returns.

Ongoing product costs Info

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

The portfolio benefits from a low Total Expense Ratio (TER) of 0.22%, making it cost-effective compared to many actively managed funds. Lower costs are advantageous as they can significantly enhance long-term returns by reducing the drag on performance. This cost efficiency aligns well with best practices and assures investors that they are minimizing unnecessary expenses. It's important to continue monitoring for any changes in fees that could impact overall returns.

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