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Balanced Risk with Broad Global Exposure and Strong U.S. Focus

Report created on Jul 14, 2024

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 a mix of ETFs with a strong emphasis on U.S. equities through the Vanguard S&P 500 UCITS Acc, making up 63.8% of the portfolio. It also includes exposure to developed markets in Europe, Japan, and emerging markets. This composition provides a balanced approach with a tilt towards developed markets, especially the U.S. The significant allocation to U.S. equities suggests confidence in the U.S. market's performance. A diversified portfolio like this can help mitigate risks associated with market volatility.

Growth Info

Historically, the portfolio has shown a commendable performance with a compound annual growth rate (CAGR) of 13.6%. The maximum drawdown of -24.72% indicates the level of risk during market downturns. With just 16 days making up 90% of returns, the portfolio has experienced concentrated periods of high performance. This highlights the importance of staying invested to capture these key return days. Consistent historical performance suggests the portfolio is robust, but regular reviews are essential to ensure alignment with long-term goals.

Projection Info

Using a Monte Carlo simulation, which models potential future outcomes by running numerous scenarios, the portfolio projects an annualized return of 10.25%. With 1,000 simulations, the median outcome suggests a potential 216.03% increase in portfolio value. However, there's a 5% chance of a -2.49% return, illustrating inherent risks. The majority of simulations indicate positive returns, reinforcing the portfolio's potential for growth. Regularly revisiting these projections can help in understanding the range of possible future outcomes and adjusting strategies accordingly.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted towards stocks, comprising 99.92% of the total allocation. This high equity exposure aligns with the balanced risk profile, offering potential for growth but also increased volatility. The negligible allocations to bonds and other asset classes suggest a focus on capital appreciation. While this can be beneficial in a rising market, it may expose the portfolio to higher risk during downturns. Considering a slight increase in bond allocation could help reduce volatility and provide a cushion during market stress.

Sectors Info

  • Technology
    26%
  • Financials
    15%
  • Health Care
    11%
  • Consumer Discretionary
    11%
  • Industrials
    11%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    3%
  • Utilities
    3%
  • Real Estate
    2%

Sector allocation is diverse, with a notable concentration in technology at 25.54%, followed by financial services and healthcare. This reflects a strategic emphasis on growth-oriented sectors. The varied sector distribution helps in spreading risk, but the tech-heavy focus might lead to higher volatility. A diversified sector allocation can provide stability across different economic cycles. Regularly reviewing sector weights ensures the portfolio remains aligned with broader market trends and personal investment objectives.

Regions Info

  • North America
    64%
  • Europe Developed
    20%
  • Japan
    6%
  • Asia Emerging
    6%
  • Asia Developed
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is predominantly focused on North America, particularly the U.S., with 63.57% allocation. This strong regional bias reflects confidence in the U.S. market's long-term prospects. There's also exposure to developed Europe, Japan, and emerging markets, providing global diversification. This geographic spread can help mitigate risks associated with regional economic downturns. However, the heavy U.S. focus might lead to vulnerability if the U.S. market underperforms. Balancing geographic exposure can enhance resilience against regional market fluctuations.

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.

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The portfolio optimization chart suggests a focus on aligning risk with personal goals. By moving along the efficient frontier, investors can choose a riskier or more conservative approach. This portfolio is already near the efficient frontier, given its balanced risk profile. However, exploring options to slightly adjust the bond allocation might offer a smoother risk-return balance. Prioritizing diversification and cost management can enhance overall performance. Before optimizing further, ensure alignment with long-term financial goals and risk appetite, as these are crucial for sustained success.

Dividends Info

  • Vanguard FTSE 100 UCITS GBP Acc 0.60%
  • Weighted yield (per year) 0.02%

The portfolio's dividend yield is relatively low, with a total yield of 0.02%. This suggests a primary focus on capital growth rather than income generation. The Vanguard FTSE 100 UCITS GBP Acc contributes a modest 0.6% yield. Investors seeking regular income might find this yield insufficient. While dividends can provide a steady income stream, the focus here is clearly on growth. If income is a priority, consider exploring options that offer higher yields, while maintaining a balanced approach to risk and return.

Ongoing product costs Info

  • Vanguard FTSE Japan UCITS ETF USD Accumulation GBP 0.15%
  • Vanguard S&P 500 UCITS Acc 0.07%
  • Vanguard FTSE 100 UCITS GBP Acc 0.10%
  • Weighted costs total (per year) 0.06%

The portfolio benefits from low costs, with an overall Total Expense Ratio (TER) of 0.06%. This cost efficiency is a positive aspect, as lower fees can significantly enhance long-term returns. The Vanguard S&P 500 UCITS Acc has the lowest cost at 0.07%, contributing to the portfolio's cost-effectiveness. Keeping costs low is crucial in maximizing net returns. Regularly monitoring and comparing costs with similar investment options ensures ongoing cost-effectiveness. Maintaining a focus on low-cost investments can help in achieving better financial outcomes over time.

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