A growth-focused portfolio with high tech exposure and significant North American concentration

Report created on Jan 10, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

This portfolio is heavily weighted towards equity ETFs, with a significant portion allocated to the Vanguard S&P 500 UCITS Acc (44.55%) and Vanguard FTSE All-World UCITS ETF (19.09%). This composition suggests a strong focus on global equity markets, particularly in developed regions. Compared to a typical balanced portfolio, this one leans heavily towards equities, indicating a preference for growth over income or stability. To enhance diversification, consider incorporating other asset types like bonds or real estate, which can provide stability during market downturns.

Growth Info

Historically, this portfolio has delivered impressive returns, with a Compound Annual Growth Rate (CAGR) of 20.97%. This suggests strong growth potential, though it's important to note the significant maximum drawdown of -33.21%, indicating periods of high volatility. Compared to benchmarks, such a performance suggests effective asset selection but also highlights the risks of a growth-focused strategy. While past performance is no guarantee of future results, maintaining a diversified approach can help mitigate risks.

Projection Info

The Monte Carlo simulation, which analyzes potential future outcomes using historical data, shows a wide range of possible returns. The median projection is an impressive 4,681.61%, with most simulations indicating positive returns. However, it's crucial to remember that these projections are based on past data and cannot predict future events. To manage expectations, ensure your investment strategy aligns with your risk tolerance and consider periodic reviews to adjust for market changes.

Asset classes Info

  • Stocks
    100%

This portfolio is overwhelmingly composed of stocks, representing 99.95% of the total allocation. While this concentration can drive high returns during bull markets, it also exposes the portfolio to significant risk in downturns. Compared to a more balanced allocation, this lack of diversification could lead to increased volatility. To improve stability, consider adding fixed income or alternative assets, which can provide a buffer against market fluctuations and enhance overall diversification.

Sectors Info

  • Technology
    44%
  • Consumer Discretionary
    11%
  • Telecommunications
    10%
  • Financials
    10%
  • Industrials
    7%
  • Health Care
    7%
  • Consumer Staples
    4%
  • Energy
    2%
  • Utilities
    2%
  • Basic Materials
    2%
  • Real Estate
    1%

The sector allocation is heavily skewed towards technology, comprising 44.35% of the portfolio. While this sector has been a strong performer, its high concentration can lead to increased volatility, especially during periods of regulatory scrutiny or interest rate hikes. Other sectors like consumer cyclicals and communication services are also well-represented. To balance risks, consider diversifying into underrepresented sectors such as energy or utilities, which can provide counter-cyclical benefits.

Regions Info

  • North America
    89%
  • Europe Developed
    5%
  • Japan
    2%
  • Asia Developed
    1%
  • Asia Emerging
    1%

Geographically, the portfolio is highly concentrated in North America, with 88.71% exposure. This limited geographic diversification may increase vulnerability to regional economic downturns. Compared to global benchmarks, this allocation lacks exposure to emerging markets, which can offer growth opportunities. To enhance geographic diversification, consider increasing investments in regions like Asia or Latin America, which may provide growth potential and reduce regional risk.

Redundant positions Info

  • Vanguard FTSE All-World UCITS ETF USD Accumulation
    Vanguard S&P 500 UCITS Acc
    High correlation

The portfolio contains highly correlated assets, particularly between the Vanguard S&P 500 UCITS Acc and the Vanguard FTSE All-World UCITS ETF. High correlation means these assets tend to move together, limiting diversification benefits. In market downturns, this could lead to significant losses. To improve diversification, consider reducing holdings in highly correlated assets and introducing others with lower correlation, which can help balance risk and return.

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. By adjusting the current asset allocation, you may achieve better efficiency without changing the overall risk level. This involves reallocating between existing assets to maximize returns for a given risk. Remember, efficiency focuses on risk-return balance, not necessarily diversification or other goals.

Ongoing product costs Info

  • iShares Automation & Robotics UCITS ETF USD (Acc) 0.40%
  • Vanguard S&P 500 UCITS Acc 0.07%
  • Vanguard FTSE All-World UCITS ETF USD Accumulation 0.22%
  • Xtrackers Artificial Intelligence &Big Data UCITS ETF 1C 0.35%
  • Weighted costs total (per year) 0.14%

The total expense ratio (TER) for the portfolio is relatively low at 0.14%, which is beneficial for long-term performance. Lower costs mean more of your returns remain invested, compounding over time. This aligns well with best practices for cost-efficient investing. However, regularly reviewing and comparing fund fees can ensure you're getting the best value. Consider replacing higher-cost funds with similar, lower-cost alternatives to further enhance returns.

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