A growth-focused portfolio with strong tech exposure and high geographic concentration

Report created on Jan 13, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio is predominantly composed of ETFs, with a significant 35% allocation to the Vanguard FTSE All-World UCITS ETF. This is complemented by a 25% stake in NVIDIA Corporation, highlighting a focus on individual stock selection. The remaining allocations are spread across other ETFs and stocks, providing a diversified structure. Compared to common benchmarks, the portfolio leans heavily on equity, which is typical for growth-oriented strategies. While this composition supports potential high returns, it also implies higher risk, especially during market downturns. Considering the high concentration in a few holdings, diversifying further into different asset types could enhance stability.

Growth Info

Historically, the portfolio has delivered an impressive CAGR of 30.07%, indicating strong growth over the past years. This performance, however, comes with a maximum drawdown of -38.21%, reflecting significant volatility. Such a drawdown can be concerning for investors with lower risk tolerance. Comparatively, this performance surpasses many traditional benchmarks, suggesting a well-timed selection of assets. However, it's crucial to remember that past performance doesn't guarantee future results. Investors should prepare for potential fluctuations and consider strategies to mitigate risk, such as diversifying into less volatile assets.

Projection Info

Monte Carlo simulations, which use historical data to predict future outcomes, show promising potential for the portfolio. With an annualized return of 32.97% and 999 out of 1,000 simulations yielding positive returns, the projections are optimistic. However, these simulations are based on past data and assumptions, and actual future performance can differ. The key percentiles indicate a wide range of possible outcomes, emphasizing the uncertainty inherent in investing. Investors should use these projections as a guide but remain vigilant and adaptable to changing market conditions.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted towards stocks, with a staggering 99.9% allocation. This concentration in a single asset class can offer high growth potential but also exposes the portfolio to significant market volatility. Compared to more balanced portfolios, this lack of diversification across asset classes may increase risk. Introducing alternative assets like bonds or real estate could provide stability and mitigate risks associated with stock market fluctuations. Balancing asset classes can help achieve a more resilient portfolio, especially during economic downturns.

Sectors Info

  • Technology
    40%
  • Financials
    12%
  • Health Care
    12%
  • Industrials
    9%
  • Consumer Discretionary
    8%
  • Telecommunications
    5%
  • Consumer Staples
    4%
  • Basic Materials
    3%
  • Energy
    3%
  • Real Estate
    2%
  • Utilities
    2%

The portfolio shows a strong concentration in the technology sector, representing nearly 40% of the total allocation. This tech-heavy focus can drive substantial growth, especially in a booming tech market. However, it also increases exposure to sector-specific risks, such as regulatory changes or market saturation. Other sectors like financial services and healthcare are present but less dominant. To enhance diversification, consider adjusting sector weights to align more closely with broader market benchmarks, potentially reducing volatility and balancing growth opportunities.

Regions Info

  • North America
    74%
  • Europe Developed
    15%
  • Asia Emerging
    3%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is overwhelmingly concentrated in North America, accounting for over 74% of the exposure. This heavy reliance on one region can limit diversification benefits and increase susceptibility to regional economic downturns. While North America has been a strong performer, expanding exposure to underrepresented regions like Europe, Asia, or emerging markets could enhance diversification and capture growth opportunities in different economic cycles. A more balanced geographic allocation can help mitigate risks associated with regional market fluctuations.

Redundant positions Info

  • Vanguard FTSE All-World UCITS ETF USD Accumulation
    SSgA SPDR ETFs Europe I Public Limited Company - SPDR MSCI ACWI IMI UCITS ETF
    High correlation

The portfolio includes highly correlated assets, particularly the Vanguard FTSE All-World UCITS ETF and the SPDR MSCI ACWI IMI UCITS ETF. High correlation between assets means they tend to move in the same direction, reducing diversification benefits. In market downturns, this can amplify losses. To improve diversification, consider replacing one of these ETFs with assets that have lower correlation to the rest of the portfolio. This adjustment can enhance risk management and potentially improve overall portfolio performance.

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 helps achieve the best possible risk-return ratio with the current assets. This involves reallocating assets to find the optimal balance between risk and return. However, it's important to note that efficiency doesn't necessarily mean diversification or aligning with specific goals. Before optimizing, address the high correlation between some assets to ensure diversification benefits. This approach can enhance overall performance and align the portfolio more closely with the investor's risk tolerance and objectives.

Ongoing product costs Info

  • SSgA SPDR ETFs Europe I Public Limited Company - SPDR MSCI ACWI IMI UCITS ETF 0.40%
  • Vanguard FTSE All-World UCITS ETF USD Accumulation 0.22%
  • SPDR® MSCI USA Small Cap Value Weighted UCITS ETF USD Acc EUR 0.30%
  • SPDR® MSCI Europe Small Cap Value Weighted UCITS ETF EUR Acc 0.30%
  • Weighted costs total (per year) 0.20%

The portfolio's total expense ratio (TER) is impressively low, supporting long-term performance by minimizing costs. With major holdings like the Vanguard FTSE All-World UCITS ETF at 0.22% and others around 0.3%, the overall cost structure is competitive. Lower costs mean more of your returns stay in your pocket, enhancing compounding over time. Maintaining this cost efficiency is crucial, so regularly review and compare fees to ensure they remain competitive. Consider replacing high-fee assets with lower-cost alternatives to further optimize cost efficiency.

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