A balanced portfolio with strong global diversification and moderate risk exposure

Report created on Dec 27, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification

Positions

The portfolio is predominantly composed of the Vanguard FTSE All-World UCITS ETF, which makes up 90% of the holdings, with the remaining 10% allocated to the VanEck Vectors Bitcoin ETN. This composition reflects a strong focus on global equity diversification, with a minor allocation to cryptocurrency. While the equity ETF provides broad market exposure, the Bitcoin ETN introduces higher volatility. Balancing such a portfolio requires careful consideration of the investor's risk tolerance and investment goals. It may be beneficial to periodically review the cryptocurrency allocation to ensure it aligns with long-term objectives.

Growth Info

Historically, the portfolio has demonstrated a commendable Compound Annual Growth Rate (CAGR) of 15.22%, indicating robust returns over time. However, it also experienced a maximum drawdown of -21.59%, highlighting the potential for significant temporary losses. This performance suggests a strong growth trajectory, but with periods of volatility. Comparing this to a benchmark, the portfolio appears to outperform typical market averages. Investors should be aware that past performance does not guarantee future results, and it is essential to remain vigilant about market changes.

Projection Info

The forward projection, based on Monte Carlo simulations, suggests a wide range of potential outcomes. This method uses historical data to estimate future returns, indicating a 5th percentile outcome of -22.03% and a 67th percentile of 2,756.29%. While the median projection shows substantial growth, the range underscores inherent uncertainty. Monte Carlo analysis is a valuable tool for understanding potential risks and rewards, but it is not foolproof. Investors should use this information to inform their strategy, recognizing that real-world results can vary.

Asset classes Info

  • Stocks
    90%
  • Other
    10%

The portfolio is heavily weighted towards stocks, with a small portion in alternative assets like cryptocurrency. This allocation aligns with a growth-oriented strategy, leveraging equities for capital appreciation while incorporating Bitcoin for potential high returns. Compared to common benchmarks, the portfolio is well-diversified within the stock category but may benefit from additional asset classes to enhance risk management. Consider introducing fixed income or real assets to further stabilize returns, especially during market downturns.

Sectors Info

  • Technology
    23%
  • Financials
    15%
  • Health Care
    9%
  • Consumer Discretionary
    9%
  • Industrials
    9%
  • Telecommunications
    7%
  • Consumer Staples
    5%
  • Energy
    4%
  • Basic Materials
    3%
  • Utilities
    3%
  • Real Estate
    2%

Sector allocation is diverse, with technology leading at 23.09%, followed by financial services and healthcare. This distribution aligns with typical global benchmarks, providing a balanced exposure to various economic segments. The tech-heavy tilt may lead to higher volatility during market corrections, especially if interest rates rise. Maintaining this balance is crucial, but periodic reviews can help adjust sector weights in response to economic shifts. This approach ensures the portfolio remains aligned with broader market trends and investor goals.

Regions Info

  • North America
    59%
  • Europe Developed
    13%
  • Asia Emerging
    5%
  • Japan
    5%
  • Asia Developed
    4%
  • Australasia
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is predominantly exposed to North America at 58.99%, with Europe and Asia also represented. This allocation reflects a strong alignment with global market indices, providing substantial diversification benefits. However, the underrepresentation of emerging markets may limit growth potential. To enhance diversification and capture emerging market opportunities, consider gradually increasing exposure to regions like Latin America or Africa. This strategy can help mitigate regional risks and capitalize on global economic shifts.

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 appears well-positioned on the Efficient Frontier, optimizing the risk-return trade-off with its current asset mix. This means it achieves the best possible returns for the given level of risk. However, it is essential to periodically review the allocation to ensure it remains efficient as market conditions change. Adjustments may be necessary to maintain this balance, potentially enhancing returns without significantly increasing risk.

Ongoing product costs Info

  • Vanguard FTSE All-World UCITS ETF USD Accumulation 0.22%
  • Weighted costs total (per year) 0.20%

The portfolio's costs are relatively low, with the Vanguard FTSE All-World UCITS ETF carrying a Total Expense Ratio (TER) of 0.22%. Keeping costs low is crucial for maximizing long-term returns, as fees can erode gains over time. This cost structure is commendable and aligns well with best practices for efficient investing. Investors should continue to monitor fees and consider lower-cost alternatives if available, ensuring that the portfolio remains cost-effective and performance-driven.

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