A cautious investor's highly diversified portfolio with a strong focus on North America

Report created on Jan 5, 2025

Risk profile Info

3/7
Cautious
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification

Positions

This portfolio is composed of six ETFs, with a significant portion allocated to the Vanguard FTSE All-World UCITS ETF and the Vanguard S&P 500 UCITS ETF. These two assets alone account for over 57% of the portfolio. Such a composition leans heavily towards large-cap global and U.S. equities, which is common in cautious investment profiles. While this structure offers broad market exposure, it may lack the fine-tuning needed for specific investment goals. Consider evaluating the balance between global and regional exposures to ensure alignment with personal objectives.

Growth Info

Historically, the portfolio has demonstrated a compound annual growth rate (CAGR) of 7.87%, with a maximum drawdown of -15.38%. This performance suggests a resilient portfolio that has weathered market fluctuations reasonably well. Comparing this to benchmark indices, such as a global equity index, indicates that the portfolio's returns are competitive. However, past performance does not guarantee future results, so it's crucial to remain vigilant of market conditions and potential shifts in economic cycles that could impact returns.

Projection Info

Using Monte Carlo simulations, the portfolio's future performance has been projected with a median return of 92.25%. This method uses historical data to simulate various market scenarios, offering insight into potential outcomes. While 811 out of 1,000 simulations resulted in positive returns, it's important to remember that these projections are not certainties. The range of outcomes highlights the inherent uncertainty in investing, and it's wise to prepare for both favorable and unfavorable scenarios by maintaining a diversified and balanced approach.

Asset classes Info

  • Stocks
    81%
  • Bonds
    19%
  • Other
    1%

The portfolio's asset allocation predominantly features stocks, accounting for over 80% of the total. This allocation is typical for investors seeking growth, but it may expose the portfolio to higher volatility. The remaining allocation includes bonds, which provide some stability and income potential. Comparing this to a balanced benchmark, the portfolio leans towards equities, which may not align with a cautious risk profile. Consider reassessing the balance between stocks and bonds to better match risk tolerance and financial goals.

Sectors Info

  • Technology
    28%
  • Financials
    11%
  • Health Care
    8%
  • Consumer Discretionary
    8%
  • Industrials
    8%
  • Telecommunications
    6%
  • Consumer Staples
    4%
  • Energy
    3%
  • Basic Materials
    2%
  • Utilities
    2%
  • Real Estate
    2%

Sector allocation reveals a strong concentration in technology, making up 28.1% of the portfolio, followed by financial services and healthcare. This tech-heavy focus can drive growth but also introduces volatility, especially during periods of regulatory changes or interest rate hikes. The allocation across other sectors is relatively balanced, providing some diversification. It's advisable to monitor sector trends and consider redistributing weight towards underrepresented areas to mitigate risks associated with sector-specific downturns.

Regions Info

  • North America
    63%
  • Europe Developed
    8%
  • Japan
    4%
  • Asia Emerging
    3%
  • Asia Developed
    3%
  • Africa/Middle East
    1%
  • Australasia
    1%

Geographic exposure is heavily skewed towards North America, which comprises over 63% of the portfolio. While this provides access to a stable and mature market, it may limit diversification benefits. Other regions like Europe and Asia have minimal representation, potentially missing out on growth opportunities in emerging markets. Comparing this to a global benchmark, the portfolio could benefit from increased geographic diversification. Consider expanding exposure to other regions to balance risk and capitalize on global economic growth.

Redundant positions Info

  • Vanguard LifeStrategy 80% Equity UCITS ETF (EUR) Accumulating
    Vanguard FTSE All-World UCITS ETF USD Accumulation
    Vanguard S&P 500 UCITS Acc
    High correlation

The portfolio exhibits high correlation among some of its key assets, notably the Vanguard LifeStrategy 80% Equity UCITS ETF, Vanguard FTSE All-World UCITS ETF, and Vanguard S&P 500 UCITS ETF. High correlation means these assets tend to move in tandem, which might limit diversification benefits during market downturns. While correlated assets can streamline management, they may not provide the desired risk mitigation. Consider diversifying with assets that have lower correlation to enhance the portfolio's resilience to market volatility.

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 be optimized using the Efficient Frontier to achieve a better risk-return ratio. Currently, the expected return is below the optimal level, suggesting room for improvement. By adjusting the allocation between existing assets, the portfolio can potentially achieve higher returns with the same risk level. This optimization focuses on maximizing returns for a given risk, not necessarily enhancing diversification. Consider exploring asset reallocation strategies to enhance efficiency and better align with financial objectives.

Ongoing product costs Info

  • Vanguard LifeStrategy 80% Equity UCITS ETF (EUR) Accumulating 0.25%
  • Vanguard S&P 500 UCITS Acc 0.07%
  • Vanguard FTSE All-World UCITS ETF USD Accumulation 0.22%
  • WisdomTree Artificial Intelligence UCITS ETF - USD Acc 0.40%
  • Global X Robotics & Artificial Intelligence UCITS ETF USD Acc 0.50%
  • Xtrackers II EUR Overnight Rate Swap UCITS ETF 1C 0.10%
  • Weighted costs total (per year) 0.19%

The portfolio's total expense ratio (TER) is 0.19%, which is impressively low and supports better long-term performance by minimizing costs. Low fees are crucial for maximizing returns over time, especially in a cautious investment strategy. Each ETF's cost is competitive, with the Vanguard S&P 500 UCITS Acc being particularly cost-effective at 0.07%. Maintaining a focus on cost efficiency is wise, but it's also important to ensure that the low-cost approach does not compromise the portfolio's diversification and risk management.

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