Cautious ESG-Focused Portfolio with Strong Global Diversification and Impressive Historical Performance
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.
What type of investor this portfolio is suitable for
Cautious Investors
This portfolio is suitable for cautious investors who prioritize ESG factors and seek broad geographic diversification. Their potential goals include long-term capital appreciation while managing risk. With a risk tolerance of 3 out of 7, they prefer moderate growth with limited downside risk. The portfolio's composition aligns with a longer investment horizon, allowing for potential growth through market cycles. Investors in this category value stability and are willing to accept some market volatility in pursuit of steady returns, making this portfolio an attractive option for their investment strategy.
Positions
-
Vanguard ESG North America All Cap UCITS ETF USD Accumulation EUR
V3YA - IE000O58J820 60.00% -
Vanguard ESG Developed Europe All Cap UCITS ETF EUR Accumulation
V3DA - IE000QUOSE01 20.00% -
Vanguard ESG Emerging Markets All Cap UCITS ETF USD Acc EUR
V3MA - IE000KPJJWM6 10.00% -
Vanguard ESG Developed Asia Pacific All Cap UCITS ETF USD Accumulating EUR
V3PA - IE000GOJO2A3 10.00%
The portfolio is composed of four Vanguard ESG ETFs, with a strong focus on North America, Europe, and Emerging Markets. The largest allocation is to the North America All Cap ETF, making up 60% of the portfolio, while the remaining allocation is divided among the Developed Europe, Emerging Markets, and Developed Asia Pacific ETFs. This composition reflects a cautious investment approach, prioritizing ESG factors and broad geographic diversification. The high allocation to North America indicates a preference for stability and growth potential in one of the world's largest markets.
Growth
Historically, this portfolio has shown impressive performance with a compound annual growth rate (CAGR) of 19.38%. This suggests that a hypothetical initial investment would have grown significantly over time. The max drawdown of -8.29% indicates limited downside risk, which is appealing for cautious investors. The fact that 90% of returns were achieved in just 22 days highlights the importance of staying invested to capture market upswings. Overall, the historical performance aligns with the portfolio's cautious risk profile, offering steady growth while managing risk effectively.
Projection
The forward projection using a Monte Carlo simulation, which tests various potential future market scenarios, suggests promising outcomes for this portfolio. Assuming a hypothetical initial investment, the simulation shows a wide range of possible returns, with a median outcome of 799.91% growth. Notably, all simulations resulted in positive returns, with an annualized return of 17.35%. This indicates a strong likelihood of continued growth, though actual results may vary. Investors should consider this optimistic projection while keeping in mind the inherent uncertainties of market conditions.
Asset classes
- Stocks 100%
- Other 0%
- Cash 0%
- No data 0%
The portfolio is heavily weighted towards stocks, accounting for nearly 100% of the asset allocation. This stock-centric approach aligns with the goal of achieving growth, albeit with higher volatility compared to a more balanced allocation that includes bonds or other asset classes. While this allocation can drive significant returns, it also exposes the portfolio to market fluctuations. Investors seeking to lower risk might consider diversifying into other asset classes, such as bonds, to create a more balanced and resilient portfolio that can better withstand market downturns.
Sectors
- Technology 27%
- Financials 18%
- Health Care 13%
- Consumer Discretionary 12%
- Telecommunications 8%
- Industrials 8%
- Consumer Staples 6%
- Real Estate 3%
- Basic Materials 3%
- Utilities 0%
- Energy 0%
Sector allocation within the portfolio is diversified, with a notable emphasis on technology (27.26%), financial services (18.37%), and healthcare (13.09%). This indicates a focus on sectors with strong growth potential and essential services. The portfolio's sector diversification helps mitigate risks associated with sector-specific downturns. However, the high concentration in technology could increase volatility. Investors may want to assess their comfort with this exposure and consider adjusting allocations if they prefer a more balanced sector approach, potentially reducing concentration in any single sector.
Regions
- North America 60%
- Europe Developed 20%
- Japan 6%
- Asia Emerging 6%
- Asia Developed 5%
- Australasia 2%
- Africa/Middle East 1%
- Latin America 1%
- Europe Emerging 0%
Geographically, the portfolio is well-diversified, with a significant allocation to North America (59.58%), followed by Europe Developed (20.01%), and smaller allocations to Asia and other regions. This global diversification reduces the impact of region-specific risks and capitalizes on growth opportunities worldwide. However, the strong focus on North America may limit exposure to emerging markets' potential growth. Investors might consider adjusting geographic allocations to better align with their risk tolerance and growth expectations, potentially increasing exposure to regions with higher growth prospects.
Risk vs. return
This chart displays the Efficient Frontier, showing the best balance between risk and return for your portfolio based on historical data. It calculates the most efficient asset allocations. If your portfolio is below the curve, it can be optimized for higher returns or lower risk. Portfolios on the curve are the most efficient.
The portfolio is close to the efficient frontier, indicating it's well-optimized for its current risk level. However, there's room for improvement by adjusting the risk level to better match personal preferences. Moving along the efficient frontier allows investors to achieve a riskier or more conservative portfolio. For a riskier approach, increasing exposure to growth-oriented assets might be considered. Conversely, for a more conservative stance, incorporating more fixed-income assets could reduce volatility. Before optimizing, investors should ensure their risk tolerance and financial goals are clearly defined to guide any adjustments.
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