A highly diversified cautious portfolio with strong global exposure and low portfolio costs

Report created on Jan 6, 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 equities, with 81% in the Vanguard FTSE All-World UCITS ETF. It includes smaller allocations to small-cap value stocks, government bonds, gold, and overnight rate swaps. This composition leans towards growth with a nod to stability through bonds and gold. Compared to typical cautious portfolios, this allocation is slightly more equity-focused. A more balanced approach could include increasing bonds or other fixed-income assets to align with a cautious risk profile.

Growth Info

Historically, the portfolio has performed well, achieving a CAGR of 10.14%. This is impressive for a cautious profile, indicating effective diversification and asset selection. The max drawdown of -15.29% suggests reasonable resilience during downturns. Compared to benchmarks, this performance is robust, though past performance doesn't guarantee future results. Regular performance reviews can help ensure alignment with financial goals, especially during market changes.

Projection Info

Monte Carlo simulations, which use historical data to predict future outcomes, show a median return of 170.2%, with 975 out of 1,000 simulations yielding positive returns. This suggests a favorable outlook, though the 5th percentile prediction of 16.92% highlights potential risks. These projections aren't foolproof, as they rely on historical trends that may not continue. Monitoring economic indicators and adjusting the portfolio accordingly can help navigate future uncertainties.

Asset classes Info

  • Stocks
    90%
  • Bonds
    8%
  • Other
    2%

The portfolio's asset class allocation is heavily skewed towards stocks, comprising nearly 90%, with bonds and other assets making up the remainder. This is higher than typical cautious portfolios, which often have a more balanced stock-to-bond ratio. While this enhances growth potential, it also increases exposure to market volatility. Consider adjusting the allocation to include more fixed-income securities for added stability and income generation.

Sectors Info

  • Technology
    22%
  • Financials
    15%
  • Consumer Discretionary
    10%
  • Industrials
    9%
  • Health Care
    9%
  • Telecommunications
    7%
  • Consumer Staples
    5%
  • Energy
    4%
  • Basic Materials
    4%
  • Real Estate
    3%
  • Utilities
    3%

The sector allocation is well-diversified, with technology, financial services, and consumer cyclicals leading the way. This distribution aligns with global benchmarks, offering exposure to various economic drivers. However, the tech-heavy component may introduce volatility, especially in changing interest rate environments. Continuously reviewing sector trends and rebalancing as needed can help maintain a balanced risk-return profile.

Regions Info

  • North America
    62%
  • Europe Developed
    12%
  • Asia Emerging
    5%
  • Japan
    5%
  • Asia Developed
    3%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is predominantly exposed to North America, followed by Europe and Asia. This aligns with global market capitalization but may limit diversification benefits. Underweighting emerging markets could reduce growth potential. Consider gradually increasing exposure to underrepresented regions to capture diverse economic growth opportunities and enhance geographic diversification.

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.

While the current portfolio is efficient, the Efficient Frontier suggests a potential optimization with an expected return of 13.80% at a higher risk level. This involves reallocating existing assets to achieve a better risk-return ratio. However, increasing risk may not align with a cautious profile. Regularly reassessing risk tolerance and potential returns can help ensure the portfolio remains aligned with investment objectives.

Dividends Info

  • Vanguard FTSE All-World UCITS ETF 0.90%
  • Weighted yield (per year) 0.73%

With a total dividend yield of 0.73%, the portfolio offers modest income. This yield is typical for a growth-oriented strategy but may not suit those seeking regular income. For income-focused investors, increasing exposure to dividend-paying stocks or income-generating bonds could enhance cash flow. Regularly reviewing dividend policies and yields can ensure alignment with income goals.

Ongoing product costs Info

  • Vanguard Eurozone Government Bond UCITS 0.07%
  • Vanguard FTSE All-World UCITS ETF 0.22%
  • Xtrackers II EUR Overnight Rate Swap UCITS ETF 1C 0.10%
  • SPDR® MSCI USA Small Cap Value Weighted UCITS ETF USD Acc EUR 0.30%
  • Weighted costs total (per year) 0.21%

The portfolio's total expense ratio (TER) of 0.21% is impressively low, supporting better long-term performance by minimizing costs. This aligns well with best practices for cost efficiency in investing. Maintaining this low-cost structure is advantageous, but it's important to regularly review fund fees and seek opportunities to reduce costs further if necessary, potentially through lower-fee alternatives.

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