A growth-focused portfolio heavily weighted in tech with limited emerging market exposure

Report created on Dec 26, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio is heavily weighted towards equities, with a significant concentration in the iShares NASDAQ 100 ETF at 82%. This high allocation to one ETF suggests a focus on growth, particularly in the technology sector. The remaining allocation is mainly in the iShares Core MSCI World ETF and a small portion in the Xtrackers MSCI Emerging Markets ETF. This structure leans towards a growth strategy but lacks diversification across different asset classes. To enhance diversification, consider adding more varied asset types, such as bonds or real estate, to balance potential risks associated with equity-heavy portfolios.

Growth Info

Historically, the portfolio has shown impressive performance with a CAGR of 19.56%. This indicates strong growth, likely driven by the tech-heavy NASDAQ 100 ETF. However, the max drawdown of -29.33% highlights the potential volatility and risk associated with such a concentrated tech exposure. It's important to remember that past performance doesn't guarantee future results. To mitigate potential downturns, consider gradually rebalancing to include more stable sectors or asset classes, which could cushion against future volatility.

Projection Info

Monte Carlo simulations, which use historical data to forecast future performance, suggest a wide range of potential outcomes. The median projection shows a 457.96% increase, but there's a significant spread between the 5th and 67th percentiles. This highlights the uncertainty and risk inherent in the current portfolio composition. While simulations provide valuable insights, they rely on historical data and assumptions that may not hold true. Regularly reviewing asset allocation and adjusting based on changing market conditions can help manage this uncertainty.

Asset classes Info

  • Stocks
    100%

The portfolio is almost entirely composed of stocks, with negligible allocations to cash, bonds, and other assets. This lack of diversity across asset classes increases exposure to market volatility. While equities offer growth potential, the absence of bonds or other asset types means limited protection during market downturns. Diversifying into different asset classes can reduce risk and stabilize returns, offering a more balanced risk-return profile. Consider introducing fixed income or alternative investments to enhance resilience against market fluctuations.

Sectors Info

  • Technology
    47%
  • Telecommunications
    15%
  • Consumer Discretionary
    15%
  • Health Care
    6%
  • Consumer Staples
    5%
  • Industrials
    4%
  • Financials
    3%
  • Basic Materials
    2%
  • Utilities
    1%
  • Energy
    1%
  • Real Estate
    1%

The portfolio is highly concentrated in technology, accounting for 46.53% of the allocation. This sector concentration can lead to significant volatility, especially during periods of sector-specific downturns. While tech has driven recent growth, it's crucial to balance this with other sectors to mitigate risks. Exploring opportunities in underrepresented sectors, such as financial services or industrials, could enhance diversification. A more balanced sector allocation would align closer with global benchmarks, reducing potential sector-specific risks.

Regions Info

  • North America
    92%
  • Europe Developed
    4%
  • Asia Emerging
    1%
  • Japan
    1%
  • Asia Developed
    1%
  • Latin America
    1%

Geographically, the portfolio is overwhelmingly concentrated in North America, at 92.42%. This heavy reliance on a single region increases vulnerability to regional economic changes and political risks. While North America has been a strong performer, diversifying geographically can spread risk and capture growth opportunities in other regions. Consider increasing exposure to Europe, Asia, or emerging markets to achieve a more globally balanced portfolio, which can provide a hedge against regional market downturns.

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 Efficient Frontier suggests that the current portfolio allocation may not be optimized for the best risk-return balance. By adjusting the weightings among existing assets, it's possible to achieve a more efficient portfolio. This involves finding the optimal mix that offers the highest expected return for a given level of risk. While optimization focuses on the current holdings, exploring additional assets could also enhance efficiency. Regular reviews and adjustments are key to maintaining an optimal risk-return profile.

Ongoing product costs Info

  • iShares Core MSCI World UCITS ETF USD (Acc) 0.20%
  • iShares NASDAQ 100 UCITS ETF USD (Acc) 0.36%
  • Xtrackers MSCI Emerging Markets UCITS ETF 1C 0.18%
  • Weighted costs total (per year) 0.33%

The portfolio's total expense ratio (TER) is 0.33%, which is relatively low and beneficial for long-term performance. Low costs help maximize net returns, aligning well with a growth strategy. However, it's essential to periodically review and compare these costs with other investment options. If lower-cost alternatives are available without compromising on quality or performance, consider switching to optimize cost efficiency further. This can lead to better compounding of returns over time.

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