A broadly diversified portfolio with a cautious risk profile and focus on global equities

Report created on Jan 1, 2025

Risk profile Info

3/7
Cautious
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio consists primarily of equity ETFs, with a notable 60% allocation to the Vanguard FTSE All-World UCITS ETF. This ETF provides broad exposure to global equities, which is a strong foundation for diversification. The remaining 40% is allocated across sector-specific ETFs, including technology and financials. This composition leans heavily towards equities, which may not align with a cautious risk profile typically favoring more fixed-income assets. Consider introducing bonds or other lower-risk asset classes to better match the cautious risk classification.

Growth Info

Historically, this portfolio has demonstrated impressive growth, with a Compound Annual Growth Rate (CAGR) of 16.87%. This indicates strong past performance, especially when compared to typical market benchmarks. However, it's important to remember that past performance does not guarantee future results. The maximum drawdown of -11.91% suggests moderate volatility, which aligns with a cautious risk profile. Maintaining this performance may require strategic adjustments as market conditions evolve.

Projection Info

Using Monte Carlo simulations, the portfolio's future performance was projected with 1,000 simulations. The median (50th percentile) outcome showed a potential growth of 1,253.37%. Monte Carlo simulations use historical data to estimate future outcomes, but they can't predict exact results. While the projections are optimistic, especially with an annualized return of 21.84%, it's crucial to remain cautious and regularly review the portfolio's alignment with personal investment goals.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted towards equities, with almost 100% allocated to stocks. This concentration in a single asset class may increase risk, particularly during market downturns. Diversifying across multiple asset classes, such as bonds or real estate, can provide a buffer against equity market volatility. While equities offer growth potential, balancing them with other asset types could enhance stability and align better with a cautious risk profile.

Sectors Info

  • Technology
    35%
  • Financials
    23%
  • Consumer Discretionary
    9%
  • Telecommunications
    7%
  • Health Care
    7%
  • Industrials
    7%
  • Consumer Staples
    4%
  • Energy
    2%
  • Basic Materials
    2%
  • Utilities
    2%
  • Real Estate
    1%

The sector allocation is tech-heavy, with 35.36% in technology and 22.75% in financial services. This concentration could lead to higher volatility, especially during market fluctuations affecting these sectors. While tech and financial sectors have been strong performers, diversifying into other sectors like healthcare or consumer staples could reduce risk. This broader sector exposure would help mitigate potential downturns in specific industries and align with a cautious investment approach.

Regions Info

  • North America
    76%
  • Europe Developed
    10%
  • Asia Emerging
    5%
  • Japan
    4%
  • Asia Developed
    3%
  • Australasia
    1%
  • Latin America
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is dominated by North American equities, comprising 76% of the total allocation. This heavy regional concentration may expose the portfolio to risks specific to the North American market. Diversifying into other regions, such as emerging markets or Europe, could enhance global diversification and reduce regional risk. Balancing geographic exposure can also capture growth opportunities in different economic environments, aligning with the goal of broad 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.

The portfolio could potentially be optimized using the Efficient Frontier, which seeks the best risk-return ratio for a given set of assets. Currently, the portfolio is heavily weighted towards equities, which may not be ideal for a cautious risk profile. Adjusting allocations to include more bonds or alternative investments could improve the risk-return balance. Optimization doesn't guarantee higher returns, but it can help achieve the most efficient use of the current assets.

Ongoing product costs Info

  • Invesco EQQQ NASDAQ-100 UCITS ETF (GBP Hdg) 0.35%
  • iShares S&P 500 USD Information Technology Sector UCITS 0.15%
  • iShares S&P 500 USD Financials Sector UCITS 0.15%
  • Vanguard FTSE All-World UCITS ETF USD Accumulation 0.22%
  • Weighted costs total (per year) 0.20%

The portfolio's total expense ratio (TER) of 0.2% is relatively low, which is advantageous for long-term performance by minimizing costs. Lower fees mean more of the portfolio's returns are retained, enhancing compounding over time. While the current costs are competitive, regularly reviewing and comparing fees with similar products can ensure continued cost-effectiveness. This vigilance helps maintain efficient returns, especially important for cautious investors prioritizing risk management.

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