Balanced portfolio with North American focus and moderate risk exposure
Report created on Apr 18, 2025Risk profile
4/7
Diversification profile
1/5
Positions
-
VN Vanguard FTSE North America UCITS ETF USD Accuimulation
VNRA - IE00BK5BQW10 60.00% -
US SPDR® MSCI USA Small Cap Value Weighted UCITS ETF USD Acc
USSC - IE00BSPLC413 20.00% -
DT iShares $ Treasury Bond 20+yr UCITS ETF USD (Acc)
DTLA - IE00BFM6TC58 10.00% -
IB iShares $ Treasury Bond 1-3 UCITS Acc
IBTA - IE00BYXPSP02 10.00%
This portfolio is heavily weighted towards equities, with 80% in stocks and 20% in bonds. The equity portion is dominated by the Vanguard FTSE North America ETF, which constitutes 60% of the portfolio. This structure aligns with a balanced investment strategy, aiming to capture growth while maintaining some stability through bonds. Compared to a typical balanced benchmark, this portfolio leans more heavily into equities, which could enhance growth potential but also increase volatility. Consider evaluating whether this allocation aligns with your risk tolerance and investment goals.
Growth
Historically, this portfolio has delivered a Compound Annual Growth Rate (CAGR) of 10.15%, showcasing strong performance. However, it experienced a maximum drawdown of -29%, indicating significant volatility during downturns. Comparing this to a benchmark, the returns are competitive, though the drawdown suggests a need for caution. Understanding the trade-off between high returns and potential losses is crucial. Reassessing the risk tolerance and ensuring the portfolio aligns with long-term financial goals can help manage expectations during market fluctuations.
Projection
Using a Monte Carlo simulation with 1,000 iterations, the portfolio's potential future performance was analyzed. The simulation predicts an annualized return of 6.14%, with a 50th percentile outcome of 85.3% over the investment horizon. While historical data informs these projections, they are not guarantees. The 5th percentile outcome of -44.7% highlights possible risks. It's important to remember that simulations rely on past data and assumptions, which may not hold true in the future. Regularly reviewing the portfolio's alignment with financial goals is advisable.
Asset classes
- Stocks 80%
- Bonds 20%
The portfolio's asset class allocation is split between stocks (80%) and bonds (20%). This distribution aims to balance growth potential with risk management. Compared to a typical balanced portfolio, this allocation is slightly more equity-heavy, which could lead to higher returns but also increased volatility. Ensuring this allocation matches your risk tolerance and investment objectives is essential. If the current balance feels too aggressive, consider adjusting the bond allocation to enhance stability.
Sectors
- Technology 21%
- Financials 14%
- Consumer Discretionary 10%
- Health Care 7%
- Industrials 7%
- Telecommunications 6%
- Consumer Staples 4%
- Energy 4%
- Real Estate 3%
- Basic Materials 2%
- Utilities 2%
Sector-wise, the portfolio is concentrated in technology (21%) and financial services (14%). This composition reflects a common trend towards tech-heavy investments, which can offer growth but also heightened volatility, especially in rising interest rate environments. The portfolio's sector diversification is relatively balanced, though it could benefit from increased exposure to sectors like utilities and consumer defensives for stability. Periodic reviews of sector allocations can help align with market trends and personal risk tolerance.
Regions
- North America 79%
The portfolio is predominantly focused on North America, with 79% of assets allocated there. This geographic concentration offers exposure to a stable and mature market but limits diversification benefits from other regions. Compared to global benchmarks, this is a significant over-exposure to North America. Consider diversifying into other regions, such as Europe or Asia, to mitigate regional risks and capture growth opportunities in emerging markets.
Market capitalization
- Mega-cap 28%
- Large-cap 21%
- Mid-cap 13%
- Small-cap 12%
- Micro-cap 6%
The portfolio's market capitalization spread includes 28% in mega-cap and 12% in small-cap stocks. This balance provides a mix of stability from large, established companies and growth potential from smaller, dynamic firms. However, the exposure to small and micro caps may introduce additional volatility. Consider whether this distribution aligns with your risk appetite. If the volatility feels too high, a shift towards larger-cap stocks could provide more stability.
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's current allocation could be optimized using the Efficient Frontier concept, which seeks the best risk-return balance. This involves adjusting the existing asset weights to achieve the highest expected return for a given level of risk. While this optimization can enhance performance, it may not align with all investment goals, such as income generation or capital preservation. Periodic reviews and adjustments can help maintain an optimal risk-return ratio.
Ongoing product costs
- iShares $ Treasury Bond 20+yr UCITS ETF USD (Acc) 0.07%
- iShares $ Treasury Bond 1-3 UCITS Acc 0.10%
- SPDR® MSCI USA Small Cap Value Weighted UCITS ETF USD Acc 0.30%
- Vanguard FTSE North America UCITS ETF USD Accuimulation 0.10%
- Weighted costs total (per year) 0.14%
The total expense ratio (TER) of this portfolio is 0.14%, which is relatively low and favorable for long-term performance. Lower costs mean more of your investment returns stay in your pocket, compounding over time. This cost efficiency aligns well with best practices in portfolio management. Regularly reviewing and managing costs can further enhance returns. If cost reduction is a priority, consider exploring other low-cost investment options.
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