A conservative portfolio with high diversification and a focus on global equity exposure

Report created on Nov 22, 2024

Risk profile Info

2/7
Conservative
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification

Positions

The portfolio is composed of 51% iShares Core MSCI World UCITS ETF, 20% Xtrackers MSCI Emerging Markets ETF, and 10% each in two bond ETFs. This structure leans heavily towards equities, with a small allocation to bonds and gold. Compared to a typical conservative portfolio, it has a higher equity weighting, which can lead to greater potential returns but also increased volatility. Balancing equity with bonds and other assets can help manage risk, so consider whether this mix aligns with your risk tolerance and goals.

Growth Info

Historically, the portfolio has performed well, achieving a Compound Annual Growth Rate (CAGR) of 13.6%. This is impressive for a conservative profile, indicating strong returns over time. The maximum drawdown of -6.6% suggests that the portfolio has managed to limit losses during downturns. However, remember that past performance doesn't guarantee future results. It's crucial to monitor how the portfolio performs under different market conditions to ensure it continues to meet your expectations.

Projection Info

Using Monte Carlo simulations, which project future outcomes based on historical data, the portfolio shows a 50th percentile return of 372.39%. This suggests a strong probability of positive returns, with all simulations showing gains. However, remember that simulations use past data and assumptions, which may not hold in the future. Regularly reviewing these projections can help you adjust your strategy as needed, ensuring it remains aligned with your financial goals and market conditions.

Asset classes Info

  • Stocks
    77%
  • No data
    10%
  • Bonds
    10%
  • Other
    3%

The portfolio is predominantly invested in stocks (77.3%), with smaller allocations to bonds (10%), gold (2.5%), and cash. This allocation suggests a focus on growth, with some diversification through bonds and gold. A typical conservative portfolio might have a higher bond allocation to reduce risk. Consider whether increasing bond exposure or other asset classes could better balance potential returns and risk, aligning more closely with conservative investment principles.

Sectors Info

  • Technology
    19%
  • Financials
    14%
  • No data
    10%
  • Consumer Discretionary
    9%
  • Industrials
    7%
  • Health Care
    7%
  • Telecommunications
    6%
  • Consumer Staples
    4%
  • Utilities
    3%
  • Energy
    3%
  • Basic Materials
    3%
  • Real Estate
    2%

The portfolio is diversified across sectors, with notable allocations in technology (19.4%) and financial services (13.5%). This sectoral spread can help mitigate risks associated with downturns in specific industries. However, tech-heavy portfolios may face higher volatility, especially during interest rate hikes. Regularly reviewing sector weights and adjusting as necessary can help maintain a balanced risk profile and capitalize on emerging sector trends.

Regions Info

  • North America
    44%
  • Asia Emerging
    10%
  • No data
    10%
  • Europe Developed
    9%
  • Asia Developed
    6%
  • Japan
    3%
  • Africa/Middle East
    2%
  • Latin America
    1%
  • Australasia
    1%

Geographically, the portfolio is heavily weighted towards North America (43.7%), with additional exposure in Asia and Europe. This provides a diversified global reach but may be underexposed to emerging markets and other regions. Diversifying geographically can help reduce risk and capture growth opportunities worldwide. Consider whether increasing exposure to underrepresented regions aligns with your investment goals and risk tolerance.

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 aims to achieve the best possible risk-return ratio. This involves adjusting asset allocations to find the most efficient mix based on current holdings. While this method focuses on maximizing returns for a given level of risk, it doesn't account for other factors like diversification goals. Consider exploring optimization tools to enhance your portfolio's efficiency while keeping your broader investment objectives in mind.

Ongoing product costs Info

  • iShares Core € Govt Bond UCITS ETF EUR (Dist) 0.12%
  • iShares Core MSCI World UCITS ETF USD (Acc) 0.20%
  • iShares MSCI World Small Cap UCITS ETF USD (Acc) 0.35%
  • db x-trackers MSCI World Utilities UCITS DR 1C 0.25%
  • Xtrackers MSCI Emerging Markets UCITS ETF 1C 0.18%
  • Weighted costs total (per year) 0.17%

The portfolio's total expense ratio (TER) is 0.17%, which is impressively low and supports better long-term performance by minimizing costs. Keeping costs low is crucial for maximizing net returns over time. Regularly reviewing and comparing the TER of your investments with similar options can help ensure you are not overpaying for management fees. This proactive approach can contribute to optimizing your portfolio's efficiency.

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