A conservative portfolio with strong bond allocation and moderate global equity exposure

Report created on Jan 12, 2025

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

Positions

The portfolio consists of a mix of bonds and equities, with a notable 32.66% allocation to the iShares Core Global Aggregate Bond UCITS ETF. This indicates a conservative stance, as bonds are generally less volatile than stocks. The equity exposure is diversified across global markets, with significant holdings in core indices like MSCI World and S&P 500. When compared to common benchmarks, this composition leans towards stability, aiming for steady returns. To enhance diversification, consider balancing the bond allocation with additional asset classes such as real estate or commodities, which can provide alternative growth opportunities and reduce reliance on traditional markets.

Growth Info

Historically, the portfolio has achieved a compound annual growth rate (CAGR) of 7.3%, a respectable return for a conservative strategy. This performance is accompanied by a maximum drawdown of -19.71%, which reflects the portfolio's ability to withstand market downturns. Compared to benchmarks, the portfolio's returns are competitive, but the drawdown suggests room for improvement in risk management. To enhance resilience, consider incorporating assets with lower correlation to equities, such as infrastructure or alternative investments, which can provide more stability during volatile periods.

Projection Info

Forward projections using Monte Carlo simulations suggest an annualized return of 9.72%, with a 50th percentile projection of 214.24% growth. This method uses historical data to simulate potential future outcomes, providing a range of possibilities rather than a single prediction. While these projections are optimistic, it's important to remember that they rely on past performance, which doesn't guarantee future results. To better prepare for uncertainties, regularly review and adjust the portfolio to reflect changing market conditions and personal financial goals.

Asset classes Info

  • Stocks
    52%
  • Bonds
    40%

The portfolio's allocation across asset classes is primarily focused on stocks (52.22%) and bonds (40.25%), which is typical for a conservative strategy. This mix offers a balance between growth potential and income stability. However, the absence of other asset classes like real estate or commodities could limit diversification benefits. By exploring opportunities in alternative asset classes, you can potentially enhance risk-adjusted returns and protect against market-specific risks, thereby achieving a more well-rounded investment approach.

Sectors Info

  • Technology
    12%
  • Financials
    9%
  • Health Care
    8%
  • Consumer Discretionary
    5%
  • Industrials
    5%
  • Telecommunications
    4%
  • Consumer Staples
    3%
  • Energy
    2%
  • Basic Materials
    2%
  • Utilities
    2%
  • Real Estate
    1%

Sector-wise, the portfolio is diversified across technology, financial services, and healthcare, with technology holding the largest share at 12.00%. This sectoral distribution aligns with global benchmarks, providing exposure to key growth areas while maintaining balance. However, a higher concentration in technology could lead to increased volatility, especially during market corrections. To mitigate this risk, consider gradually increasing exposure to underrepresented sectors such as energy or utilities, which can offer stability and hedge against sector-specific downturns.

Regions Info

  • North America
    35%
  • Europe Developed
    9%
  • Asia Emerging
    3%
  • Asia Developed
    2%
  • Japan
    2%
  • Africa/Middle East
    1%
  • Australasia
    1%

Geographically, the portfolio is heavily weighted towards North America (35.37%), with limited exposure to emerging markets. This aligns with many global benchmarks but may miss opportunities in fast-growing regions. While North America offers stability and developed market benefits, diversifying into emerging markets can provide growth potential and reduce regional concentration risk. Consider increasing exposure to Asia or Latin America, which may offer higher returns due to their expanding economies and youthful demographics.

Redundant positions Info

  • iShares Core MSCI World UCITS ETF USD (Acc)
    Vanguard FTSE All-World UCITS ETF USD Accumulation
    iShares Core S&P 500 UCITS ETF USD (Acc)
    High correlation

The portfolio includes highly correlated assets like the iShares Core MSCI World, Vanguard FTSE All-World, and iShares Core S&P 500 ETFs. High correlation means these assets tend to move together, which can limit diversification benefits. During market downturns, such assets may not provide the desired risk mitigation. To improve diversification, evaluate the necessity of holding multiple similar ETFs and consider reallocating to less correlated investments, such as bonds, commodities, or region-specific funds, to enhance the portfolio's resilience.

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, which identifies the best possible risk-return ratio based on current assets. This involves adjusting allocations to maximize returns for a given level of risk. While the current setup is conservative, exploring optimization can reveal opportunities for better performance without significantly increasing risk. Regularly review the portfolio's alignment with the Efficient Frontier to ensure it's achieving the desired balance between risk and return, adapting to market changes as needed.

Dividends Info

  • iShares Euro Dividend UCITS ETF 5.80%
  • Weighted yield (per year) 0.26%

The portfolio's total dividend yield is 0.26%, with the iShares Euro Dividend UCITS ETF contributing a significant 5.8%. Dividends can provide a steady income stream, which is particularly valuable in a conservative portfolio. However, the overall yield is relatively low, indicating limited income focus. To boost income, consider increasing allocations to higher-dividend-paying assets or sectors, such as utilities or consumer staples, which traditionally offer stable and attractive yields, balancing growth and income objectives.

Ongoing product costs Info

  • Invesco Physical Gold ETC EUR 0.12%
  • iShares Core Global Aggregate Bond UCITS ETF 0.10%
  • iShares Core MSCI World UCITS ETF USD (Acc) 0.20%
  • iShares Euro Dividend UCITS ETF 0.40%
  • iShares Core MSCI Emerging Markets IMI UCITS 0.18%
  • iShares MSCI World Small Cap UCITS ETF USD (Acc) 0.35%
  • iShares $ TIPS UCITS ETF USD (Acc) 0.12%
  • iShares S&P 500 Health Care Sector UCITS ETF 0.18%
  • iShares Core S&P 500 UCITS ETF USD (Acc) 0.12%
  • Vanguard FTSE All-World UCITS ETF USD Accumulation 0.22%
  • Weighted costs total (per year) 0.16%

The portfolio's total expense ratio (TER) is 0.16%, which is impressively low and supports better long-term performance by minimizing costs. Low costs are crucial, as they enhance net returns over time. This cost efficiency aligns well with best practices in portfolio management. However, always remain vigilant for opportunities to further reduce expenses, such as switching to lower-cost ETFs or negotiating fees with service providers, ensuring that cost savings continue to contribute positively to the portfolio's overall performance.

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