A globally diversified ETF portfolio with a balanced risk profile and low cost

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

Balanced Investors

This portfolio suits an investor with a balanced risk tolerance seeking global equity exposure and long-term growth. It is ideal for those comfortable with market fluctuations and who prioritize capital appreciation over income. The broad diversification across sectors and regions aligns with investors looking to capture global market trends. However, the high equity concentration suggests a preference for growth over stability, making it suitable for individuals with a long-term investment horizon and the ability to withstand short-term volatility.

Positions

  • iShares MSCI ACWI UCITS ETF
    IUSQ - IE00B6R52259
    100.00%

This portfolio consists entirely of the iShares MSCI ACWI UCITS ETF, which offers a single asset class exposure to global equities. The ETF provides broad diversification across various sectors and regions, aligning with a balanced risk profile. Compared to typical portfolios with a mix of stocks, bonds, and other assets, this one is heavily weighted towards equities. While this structure can capture global market growth, it may lack the stability that a more diversified asset mix, including bonds, could offer. Consider adding other asset classes to enhance stability and reduce volatility during market downturns.

Growth Info

Historically, the portfolio has shown a strong CAGR of 11.4%, indicating robust growth over time. However, it also experienced a significant maximum drawdown of -33.61%, highlighting its susceptibility to market volatility. This performance aligns with equity-heavy portfolios, which can offer high returns but also pose higher risks. When compared to a diversified benchmark, this portfolio's performance is competitive, but the drawdown suggests a need for risk mitigation strategies. Consider incorporating assets that can provide downside protection without sacrificing growth potential.

Projection Info

The Monte Carlo simulation, which uses historical data to predict future outcomes, suggests a wide range of potential returns. With a 50th percentile projection of 331.35% and a 67th percentile of 470.89%, the portfolio shows promising growth potential. However, the 5th percentile projects only 67.29%, indicating possible downside risks. While simulations offer insights, remember they are based on past data and cannot predict future market conditions with certainty. To mitigate risks, consider strategies that diversify exposure and protect against unfavorable scenarios.

Asset classes

  • Stocks
    99%
  • Cash
    0%
  • Other
    0%
  • Bonds
    0%

The portfolio is predominantly composed of equities, with minimal allocations to cash, bonds, and other assets. This concentration in stocks provides significant growth potential but also increases exposure to market volatility. Compared to a balanced portfolio that includes bonds and other asset classes, this allocation may lack stability. Diversifying into additional asset classes can enhance risk management and provide a buffer against stock market fluctuations. Consider exploring options like fixed income or alternative investments to achieve a more balanced risk-return profile.

Sectors

  • Technology
    27%
  • Financials
    16%
  • Consumer Discretionary
    11%
  • Health Care
    10%
  • Industrials
    10%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    3%
  • Utilities
    3%
  • Real Estate
    2%

The sector allocation is led by technology at 27.4%, followed by financial services and consumer cyclicals. This concentration in tech aligns with current market trends but may introduce volatility, especially during interest rate fluctuations. Compared to a benchmark, this portfolio is tech-heavy, which could benefit from growth in this sector but also expose it to sector-specific risks. To balance this exposure, consider diversifying into underrepresented sectors that may offer stability and counter-cyclical growth, such as utilities or consumer defensive sectors.

Regions

  • North America
    70%
  • Europe Developed
    14%
  • Asia Emerging
    5%
  • Japan
    5%
  • Asia Developed
    4%
  • Australasia
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%
  • Europe Emerging
    0%

Geographically, the portfolio is heavily weighted towards North America, with 69.5% exposure, while Europe and Asia have smaller allocations. This geographic concentration may limit diversification benefits and increase vulnerability to region-specific economic changes. Compared to a global benchmark, this portfolio is overexposed to North American markets. To achieve better geographic diversification, consider increasing allocations to emerging markets or other underrepresented regions, which could provide additional growth opportunities and reduce regional risk exposure.

Ongoing product costs

  • iShares MSCI ACWI UCITS ETF 0.20%
  • Weighted costs total (per year) 0.20%

The portfolio boasts a low Total Expense Ratio (TER) of 0.2%, which is favorable for long-term performance. Low costs mean a greater portion of returns is retained by the investor rather than lost to fees. Compared to higher-cost funds, this portfolio is well-positioned to maximize net returns over time. Maintaining low costs is crucial for compounding growth, so continue to monitor and evaluate fees regularly. If opportunities arise to further reduce costs without compromising diversification or performance, consider making adjustments.

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