A balanced portfolio with a strong focus on global equities and moderate diversification.

Report created on Dec 6, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

This portfolio is predominantly composed of ETFs with a heavy focus on global equities, specifically large-cap stocks. The allocation is evenly split among three major ETFs, each representing 30% of the portfolio: iShares Core MSCI World, Lyxor Core MSCI World, and iShares Core S&P 500. A smaller portion, 10%, is invested in the Xtrackers MSCI Europe Small Cap ETF, adding a slight tilt towards European small-cap equities. The portfolio's structure reflects a balanced approach, focusing on both global diversification and potential growth. This composition is beneficial for investors seeking exposure to established markets while maintaining some exposure to smaller, potentially higher-growth segments.

Growth Info

Historically, this portfolio has delivered a strong CAGR of 14.74%, indicating robust growth over time. However, it has also experienced a significant maximum drawdown of -34.32%, highlighting periods of volatility. This performance trend shows that while the portfolio has the potential for high returns, it is not immune to market downturns. Understanding this balance is crucial for investors who need to manage expectations and prepare for fluctuations. It's important to note that past performance does not guarantee future results, and market conditions can change rapidly.

Projection Info

The Monte Carlo simulation, a method that uses historical data to project future outcomes, suggests a wide range of potential returns for this portfolio. With 1,000 simulations, the portfolio shows a 5th percentile outcome of 107.34% and a 67th percentile outcome of 644.95%. The median, or 50th percentile, is projected at 451.53%, indicating a strong potential for growth. However, these projections are based on historical data and assumptions that may not hold true in the future. Investors should use these results as a guide, not a guarantee, and remain adaptable to changing market conditions.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted towards stocks, with 99.74% allocated to equities, and negligible amounts in cash, bonds, and other assets. This concentration in equities suggests a focus on growth rather than income or capital preservation. While this can lead to higher returns, it also increases exposure to market volatility. A more diversified allocation across different asset classes, such as bonds or real estate, could help mitigate risk and provide a more stable return profile. Investors should consider their risk tolerance and financial goals when evaluating this allocation.

Sectors Info

  • Technology
    27%
  • Financials
    15%
  • Consumer Discretionary
    11%
  • Industrials
    11%
  • Health Care
    10%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    3%
  • Real Estate
    3%
  • Utilities
    3%

The portfolio is diversified across several sectors, with the largest allocations in Technology (26.78%), Financial Services (15.01%), and Consumer Cyclicals (10.90%). This sectoral distribution indicates a tilt towards growth-oriented industries, which can drive returns during economic expansions. However, it also exposes the portfolio to sector-specific risks, such as regulatory changes or technological disruptions. Balancing sector exposure can help manage these risks and ensure a more resilient portfolio. Investors might consider adjusting their sector allocation to better align with their risk tolerance and market outlook.

Regions Info

  • North America
    76%
  • Europe Developed
    19%
  • Japan
    3%
  • Australasia
    1%

Geographically, the portfolio is heavily skewed towards North America, which comprises 75.93% of the allocation, followed by Europe Developed at 19.05%. This concentration provides exposure to well-established markets but limits the benefits of geographic diversification. A broader geographic spread, including emerging markets, could offer additional growth opportunities and reduce region-specific risks. Investors should assess whether this geographic allocation aligns with their investment objectives and consider adjustments to capture a more global market perspective.

Redundant positions Info

  • iShares Core MSCI World UCITS ETF USD (Acc)
    iShares Core S&P 500 UCITS ETF USD (Acc)
    Lyxor Core MSCI World (DR) UCITS ETF
    High correlation

The portfolio's assets are highly correlated, particularly among the three major ETFs, which cover similar markets and indices. This high correlation means that the assets tend to move in the same direction, reducing the diversification benefits. While this can amplify gains during market upswings, it also increases risk during downturns. To enhance diversification, investors could consider adding less correlated assets, such as bonds or alternative investments, which tend to perform differently under various market conditions.

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 benefit from optimization using the Efficient Frontier, which aims to achieve the best possible risk-return ratio with the current assets. This process involves altering the allocation between existing assets to enhance efficiency, not necessarily increasing diversification. By focusing on the risk-return trade-off, investors can potentially achieve higher returns for the same level of risk or reduce risk while maintaining expected returns. This approach requires careful analysis and may involve rebalancing to ensure alignment with long-term goals.

Ongoing product costs Info

  • Xtrackers MSCI Europe Small Cap UCITS ETF 0.30%
  • iShares Core MSCI World UCITS ETF USD (Acc) 0.20%
  • Lyxor Core MSCI World (DR) UCITS ETF 0.12%
  • iShares Core S&P 500 UCITS ETF USD (Acc) 0.12%
  • Weighted costs total (per year) 0.16%

The portfolio's total expense ratio (TER) is relatively low at 0.16%, which is beneficial for long-term returns as lower costs compound over time. The costliest ETF is the Xtrackers MSCI Europe Small Cap with a TER of 0.3%, while the others are more affordable. Minimizing costs is a crucial aspect of portfolio management, as even small differences in fees can significantly impact returns over time. Investors should regularly review the cost structure of their investments and consider whether more cost-effective alternatives are available.

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