A balanced portfolio with a global equity focus and strong historical performance

Report created on Feb 24, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio consists of two ETFs, with an 80% allocation to the SPDR MSCI ACWI UCITS ETF and a 20% allocation to the Avantis U.S. Small Cap Value ETF. This structure indicates a significant emphasis on global equities, with a notable tilt towards small-cap value stocks. Compared to a typical balanced portfolio, which might include bonds or other asset classes, this portfolio is heavily equity-focused. Such a composition can lead to higher potential returns, but also increased volatility. To align with a balanced risk profile, consider introducing other asset classes like bonds to reduce volatility and enhance diversification.

Growth Info

Historically, the portfolio has delivered a robust Compound Annual Growth Rate (CAGR) of 14.55%, outperforming many traditional benchmarks. A hypothetical initial investment would have grown significantly, despite a maximum drawdown of -35.91%. This drawdown highlights the portfolio's vulnerability during market downturns, a common trait for equity-heavy portfolios. While past performance is impressive, it's essential to remember that it does not guarantee future results. Regularly reviewing performance against benchmarks can help ensure alignment with long-term goals and risk tolerance.

Projection Info

The portfolio's forward projection, based on a Monte Carlo simulation of 1,000 scenarios, shows a median potential growth of 589.9%. Monte Carlo simulations use historical data to estimate a range of possible outcomes, providing insights into future performance under various market conditions. However, these projections are not predictions and should be interpreted with caution. The simulation suggests a high likelihood of positive returns, but it's crucial to remain vigilant and adaptable to changing market conditions, ensuring the portfolio remains aligned with personal financial objectives.

Asset classes Info

  • Stocks
    100%

The portfolio is entirely composed of stocks, lacking exposure to other asset classes like bonds or real estate. This 100% equity allocation can offer substantial growth potential but also increases the portfolio's sensitivity to market fluctuations. Diversification across multiple asset classes typically reduces risk and enhances long-term stability. To improve risk management, consider introducing non-equity assets, which can provide a buffer during market volatility and help achieve a more balanced risk-return profile.

Sectors Info

  • Technology
    23%
  • Financials
    19%
  • Consumer Discretionary
    12%
  • Industrials
    11%
  • Health Care
    8%
  • Telecommunications
    7%
  • Energy
    6%
  • Consumer Staples
    6%
  • Basic Materials
    4%
  • Utilities
    2%
  • Real Estate
    2%

The portfolio is diversified across several sectors, with the largest allocations in technology (23%) and financial services (19%). This sectoral distribution mirrors global equity benchmarks, providing a balanced exposure to various economic segments. However, a tech-heavy allocation may lead to higher volatility, especially during periods of interest rate changes or regulatory shifts. Regularly reviewing sector performance and trends can help maintain a well-balanced portfolio, ensuring it adapts to economic cycles and remains aligned with investment goals.

Regions Info

  • North America
    75%
  • Europe Developed
    11%
  • Asien Schwellenländer
    4%
  • Japan
    4%
  • Asien
    3%
  • Australasia
    1%
  • Afrika/Mittlerer Osten
    1%
  • Latin America
    1%

Geographically, the portfolio is heavily weighted towards North America, comprising 75% of the allocation, with limited exposure to emerging markets. This geographic bias can lead to concentrated risk, particularly if the U.S. market underperforms. While North America has been a strong performer historically, diversifying into other regions can reduce risk and capture growth opportunities in emerging markets. Consider reallocating some assets to increase exposure to underrepresented regions, enhancing global diversification and reducing dependence on any single market.

Market capitalization Info

  • Mega-cap
    39%
  • Large-cap
    28%
  • Mid-cap
    13%
  • Small-cap
    11%
  • Micro-cap
    9%

The portfolio's market capitalization distribution is diverse, with a significant focus on mega-cap stocks (39%) and a meaningful allocation to small and micro-cap stocks (20%). This mix provides a balance between stability and growth potential, as larger companies offer steadier returns, while smaller companies can deliver higher growth. However, small-cap stocks are often more volatile. Regularly reviewing the market cap distribution can ensure it remains aligned with risk tolerance and investment objectives, balancing stability with growth potential.

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 risk-return profile can be optimized using the Efficient Frontier, a concept that identifies the best possible risk-return ratio for a given set of assets. By reallocating between the current ETFs, it's possible to enhance the portfolio's efficiency, achieving better returns for the same level of risk or reducing risk without sacrificing returns. This optimization is based solely on the existing assets, emphasizing the importance of regular review and adjustment to maintain an optimal balance that aligns with changing market conditions and personal financial goals.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.70%
  • Weighted yield (per year) 0.34%

The portfolio's dividend yield is relatively low at 0.34%, with the Avantis U.S. Small Cap Value ETF contributing a yield of 1.70%. Dividends can provide a steady income stream and contribute to total returns, particularly in volatile markets. While this portfolio focuses more on capital appreciation, investors seeking income might consider adding higher-yielding assets. Balancing growth and income can help achieve a more stable return profile, aligning with both short and long-term financial goals.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • SSgA SPDR ETFs Europe I Public Limited Company - SPDR MSCI ACWI UCITS ETF 0.45%
  • Weighted costs total (per year) 0.41%

The portfolio's total expense ratio (TER) is 0.41%, which is reasonable for an equity-focused portfolio. Lower costs can significantly enhance long-term returns, as fees compound over time. The Avantis U.S. Small Cap Value ETF has a TER of 0.25%, while the SPDR MSCI ACWI UCITS ETF has a higher TER of 0.45%. To further optimize costs, consider exploring ETFs or funds with lower expense ratios, ensuring that cost savings do not compromise investment quality or strategy.

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