A growth-oriented portfolio with balanced diversification and a strong global equity focus

Report created on Mar 7, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

This portfolio is evenly split between two global equity ETFs: SPDR MSCI ACWI IMI and Vanguard FTSE All-World UCITS ETF, each making up 50%. This setup offers broad exposure to global markets. Compared to a typical benchmark, this portfolio leans heavily toward equities, with no allocation to bonds or alternative assets, which aligns with its growth profile. The 100% stock allocation suggests a focus on capital appreciation, which is suitable for investors seeking high growth potential. However, the absence of fixed-income securities may increase volatility, which should be considered in the context of the investor's risk tolerance.

Growth Info

Historically, the portfolio delivered a solid Compound Annual Growth Rate (CAGR) of 12.25%, indicating robust growth over time. To put this into perspective, if an investor had initially invested £10,000, it would have grown to approximately £19,740 over five years. The portfolio's maximum drawdown of -34.15% highlights its exposure to market fluctuations, which is typical for growth-focused investments. Comparing this to a benchmark, the returns are impressive, although the drawdown suggests potential for significant short-term losses. Investors should be aware that past performance does not guarantee future results, and should consider their ability to withstand such volatility.

Projection Info

Using Monte Carlo simulations, which project potential future outcomes based on historical data, the portfolio's median projected return is 349.3%, with 971 out of 1,000 simulations showing positive returns. This suggests a high likelihood of achieving substantial growth over time. However, it's important to note that these projections are based on historical trends and inherent assumptions, and actual future performance can vary. Investors should consider these simulations as a guide rather than a prediction, and maintain a long-term perspective to benefit from potential growth while managing risks.

Asset classes Info

  • Stocks
    100%

The portfolio's allocation is solely in stocks, emphasizing its growth orientation. While this provides the potential for high returns, it also increases exposure to market volatility. In comparison to a diversified benchmark, which might include bonds or alternative investments, this portfolio lacks the stabilizing effect of fixed-income securities. Investors should be prepared for potential fluctuations and consider whether this level of risk aligns with their investment goals. For those seeking to mitigate volatility, introducing a small percentage of bonds could provide balance without significantly impacting growth potential.

Sectors Info

  • Technology
    25%
  • Financials
    17%
  • Consumer Discretionary
    11%
  • Industrials
    10%
  • Health Care
    10%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    4%
  • Utilities
    3%
  • Real Estate
    2%

The portfolio is heavily weighted towards technology (25%) and financial services (17%), reflecting a significant concentration in these sectors. This aligns with global trends but may expose the portfolio to sector-specific risks, such as regulatory changes or interest rate fluctuations. A diversified benchmark would typically have a more balanced sector allocation. While technology and financials have driven recent market growth, investors should be aware of potential volatility. To enhance stability, consider gradually increasing exposure to underrepresented sectors like utilities or consumer defensives, which can offer more consistent returns during market downturns.

Regions Info

  • North America
    67%
  • Europe Developed
    14%
  • Japan
    5%
  • Asia Emerging
    5%
  • Asia Developed
    4%
  • Australasia
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is heavily weighted towards North America, which comprises 67% of the allocation. This reflects a strong bias towards U.S. markets, which have historically delivered robust returns. However, this concentration increases vulnerability to regional economic downturns. In comparison, a more geographically diversified benchmark might include greater exposure to emerging markets or other developed regions. Investors could consider diversifying further by increasing allocations to underrepresented areas like Asia or Europe, which may provide growth opportunities and reduce reliance on North American markets.

Market capitalization Info

  • Mega-cap
    45%
  • Large-cap
    34%
  • Mid-cap
    17%
  • Small-cap
    3%
  • Micro-cap
    1%

The portfolio predominantly consists of mega-cap (45%) and big-cap (34%) stocks, indicating a preference for well-established companies. This can offer stability and lower risk compared to smaller companies. However, the limited exposure to small (3%) and micro-cap (1%) stocks may reduce potential for higher returns typically associated with smaller, high-growth companies. Compared to a diversified benchmark, this portfolio is skewed towards larger firms. Investors seeking to enhance growth potential might consider gradually increasing their allocation to small-cap stocks, which can offer higher rewards albeit with increased risk.

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 can be optimized using the Efficient Frontier, a concept that helps identify the best possible risk-return ratio. This involves adjusting asset weights to achieve maximum returns for a given level of risk. While the current allocation is growth-focused, exploring different combinations of the existing assets could enhance efficiency. Investors should consider whether they are maximizing potential returns relative to risk and make adjustments as needed. It's important to note that optimization is based on current assets and does not necessarily mean adding new asset classes.

Ongoing product costs Info

  • SPDR MSCI ACWI IMI 0.40%
  • Vanguard FTSE All-World UCITS ETF USD Accumulation 0.22%
  • Weighted costs total (per year) 0.31%

The portfolio's total expense ratio (TER) is 0.31%, which is relatively low and supports better long-term returns by minimizing costs. This is a positive aspect, as lower costs mean more of the portfolio's gains are retained. Compared to industry averages, this TER is competitive and aligns with best practices for cost-efficient investing. Investors should continue to monitor these costs, ensuring they remain low, as high fees can erode returns over time. Regularly reviewing and comparing expense ratios of alternative investment options can help maintain cost-efficiency.

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