Globally diversified equity portfolio with strong cost efficiency and balanced risk for long term growth
Report created on Jul 19, 2024Risk profile
4/7
Diversification profile
4/5
Positions
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VW Vanguard FTSE All-World UCITS ETF USD Accumulation
VWCE - IE00BK5BQT80 75.00% -
EX Xtrackers MSCI World ex USA UCITS ETF 1C USD EUR
EXUS - IE0006WW1TQ4 15.00% -
DX Xtrackers MSCI Europe Small Cap UCITS ETF
DX2J 10.00%
The portfolio is built almost entirely from three broad equity ETFs, with a clear core‑satellite structure. One global ETF forms a dominant 75% core, giving very wide market coverage in a single position. A 15% satellite tilts toward global developed markets outside one major region, while a 10% sleeve targets smaller companies in a specific developed area. This kind of structure is simple to manage yet still offers meaningful diversification. Having just a few broad funds also reduces operational complexity and makes tracking, rebalancing, and tax management easier. For someone wanting long‑term growth without micromanaging many positions, this streamlined but globally spread setup is a strong foundation.
Growth
Over the measured period, €1,000 grew to about €1,217, implying a compound annual growth rate (CAGR) of 10.07%. CAGR is like the average speed of a car over a long journey, smoothing out bumps. That growth slightly beat the US market benchmark and came very close to the global market, despite being more diversified than a pure US tilt. The maximum drawdown, around -19.7%, was smaller than both benchmarks, which shows the downside has been relatively well controlled. This mix of near‑global‑market returns with somewhat lower worst‑case declines is encouraging, but it’s still a short window, so it should be treated as a snapshot rather than a guarantee of future behaviour.
Asset classes
- Stocks 90%
- No data 10%
Around 90% of the portfolio sits in stocks, with 10% categorized as “no data,” which simply means the asset class couldn’t be cleanly identified. A 90% equity allocation is clearly growth‑oriented and will naturally come with meaningful ups and downs along the way. Compared with a typical “balanced” mix that might hold a sizable bond allocation, this setup leans more toward long‑term appreciation than stability. That aligns well with multi‑decade horizons where short‑term volatility is less important than compounding. The key practical takeaway: this structure expects the investor to tolerate sizeable drawdowns at times in exchange for better expected returns over long periods.
Sectors
- Technology 21%
- Financials 16%
- Industrials 11%
- Consumer Discretionary 8%
- Health Care 8%
- Telecommunications 7%
- Consumer Staples 5%
- Basic Materials 4%
- Energy 4%
- Utilities 3%
- Real Estate 2%
Sector exposure is broadly spread, with technology the largest at 21%, followed by financials, industrials, and a healthy mix across consumer, health, telecoms, and defensive areas. This pattern is very close to what you’d see in a global equity benchmark today, which is a strong indicator of good diversification. A tech‑leading but not extreme tilt is typical in modern indices and has helped performance recently. However, tech can be more sensitive to interest rate changes and sentiment swings, so periodic volatility spikes are normal. Because other sectors like financials, industrials, and healthcare are also well‑represented, the portfolio is not overly dependent on a single industry’s fate.
Regions
- North America 49%
- Europe Developed 20%
- Japan 8%
- Asia Developed 5%
- Asia Emerging 4%
- Australasia 2%
- Africa/Middle East 1%
- Latin America 1%
Geographically, the portfolio is anchored in developed North America at roughly half the exposure, with a meaningful 20% in developed Europe and additional allocations to Japan, other developed Asia, and emerging regions. This mix closely mirrors common global equity benchmarks, which naturally have a large weighting to the biggest developed markets. That alignment is beneficial: it means the portfolio benefits from broad global growth while not requiring active country‑picking decisions. Underweights to smaller regions compared to their economic size are simply a feature of market‑cap‑weighted indexing. Overall, this geographic spread should help soften the impact of country‑specific shocks, while still participating in major global trends.
Market capitalization
- Mega-cap 45%
- Large-cap 31%
- Mid-cap 13%
By market capitalization, there is a clear lean toward mega‑caps and large‑caps, together around three‑quarters of the equity exposure, with a smaller 13% slice in mid‑caps. This is typical for index‑based portfolios because the biggest companies dominate market‑value‑weighted indices. The dedicated small‑cap ETF helps broaden the size spectrum a bit, adding companies that behave differently from global giants. Large businesses often bring stability, stronger balance sheets, and high liquidity, while mid and smaller companies can offer more growth but also more volatility. This blend suggests a primary focus on stability and market‑like behaviour, with a subtle growth kicker from the smaller‑cap sleeve.
True holdings
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NV NVIDIA Corporation 3.16%
Part of fund(s):- Vanguard FTSE All-World UCITS ETF USD Accumulation
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AA Apple Inc 2.94%
Part of fund(s):- Vanguard FTSE All-World UCITS ETF USD Accumulation
-
MS Microsoft Corporation 2.22%
Part of fund(s):- Vanguard FTSE All-World UCITS ETF USD Accumulation
-
AM Amazon.com Inc 1.54%
Part of fund(s):- Vanguard FTSE All-World UCITS ETF USD Accumulation
-
GO Alphabet Inc Class A 1.38%
Part of fund(s):- Vanguard FTSE All-World UCITS ETF USD Accumulation
-
23 Taiwan Semiconductor Manufacturing Co. Ltd. 1.18%
Part of fund(s):- Vanguard FTSE All-World UCITS ETF USD Accumulation
-
AV Broadcom Inc 1.13%
Part of fund(s):- Vanguard FTSE All-World UCITS ETF USD Accumulation
-
GO Alphabet Inc Class C 1.12%
Part of fund(s):- Vanguard FTSE All-World UCITS ETF USD Accumulation
-
ME Meta Platforms Inc. 1.08%
Part of fund(s):- Vanguard FTSE All-World UCITS ETF USD Accumulation
-
TS Tesla Inc 0.87%
Part of fund(s):- LS 1x Tesla Tracker ETP Securities GBP
- Vanguard FTSE All-World UCITS ETF USD Accumulation
- Top 10 total 16.63%
Looking through the ETFs, the largest underlying exposures are the usual global giants like NVIDIA, Apple, Microsoft, Amazon, and Alphabet, each appearing via multiple funds. This overlap means a bigger effective tilt to mega‑cap growth names than the ETF list alone suggests. Hidden overlap is normal in broad index investing, but it does reduce diversification slightly because many holdings react to the same big companies. That said, these firms are large parts of the global market itself, so their presence aligns well with standard benchmarks. Just be aware that short‑term moves in a handful of mega‑caps can have an outsized impact on total portfolio performance, even when holding diversified funds.
Factors
Factor exposures are estimated using statistical models based on historical data and measure systematic (market-relative) tilts, not absolute portfolio characteristics. Results may vary depending on the analysis period, data availability, and currency of the underlying assets.
Factor exposure shows a notable very low tilt to the Size factor and a high tilt to Low Volatility. Factors are characteristics like size, value, or momentum that research links to long‑term return patterns. A very low Size score means the portfolio is skewed toward larger companies rather than smaller ones, which fits the strong mega‑ and large‑cap profile seen earlier. The high Low Volatility exposure suggests a bias toward companies that historically swing less than the market. In calm or choppy markets, that can reduce drawdowns, which aligns nicely with a balanced risk profile. The trade‑off is potentially less explosive performance in roaring, risk‑on rallies led by very aggressive stocks.
Risk contribution
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Vanguard FTSE All-World UCITS ETF USD Accumulation
Weight: 75.00% 77.7% -
Xtrackers MSCI World ex USA UCITS ETF 1C USD EUR
Weight: 15.00% 13.4% -
Xtrackers MSCI Europe Small Cap UCITS ETF
Weight: 10.00% 9.0%
Risk contribution reveals how much each holding drives overall volatility, which can differ from its weight. Here, the main global ETF at 75% weight contributes about 78% of portfolio risk, very much in line with its size. The two satellite ETFs contribute slightly less risk than their weights, suggesting they modestly diversify the core rather than amplifying swings. This is a healthy pattern: the main building block is the main risk driver, and satellites refine the profile instead of dominating it. If future changes are considered, adjusting the core weight would be the most powerful lever for dialling overall risk up or down, while the satellites are fine‑tuning tools.
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.
On the risk‑return chart, the current portfolio sits essentially on the efficient frontier, with a Sharpe ratio of 0.64 compared with 0.77 for the optimal mix and 0.74 for the minimum‑variance version. Sharpe ratio measures return per unit of risk, like kilometres per litre of fuel. Being on or very near the frontier means, given these exact holdings, the chosen weights already deliver close to the best achievable trade‑off. Small tweaks could slightly improve risk‑adjusted performance, but we’re talking about fine‑tuning, not fixing a problem. This is an encouraging sign: the structure is already efficient, so future changes can be guided mainly by comfort with volatility and personal goals rather than any glaring inefficiencies.
Ongoing product costs
- Vanguard FTSE All-World UCITS ETF USD Accumulation 0.19%
- Weighted costs total (per year) 0.14%
The total expense ratio (TER) of roughly 0.14% is impressively low for a globally diversified equity portfolio. TER is the annual fee charged by the funds, quietly deducted inside the ETF. Paying less in fees leaves more of the market’s return in your pocket, and over decades even small differences compound heavily. This cost level compares very favourably with both active funds and many higher‑fee ETFs, supporting better long‑term outcomes without extra effort. From a cost‑efficiency standpoint, the portfolio is already in excellent shape, so there is little to gain from chasing marginally cheaper products unless they also offer clear structural or tax advantages.
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