Moderately diversified portfolio with strong focus on developed markets and large-cap stocks
Report created on Apr 2, 2025Risk profile
4/7
Diversification profile
3/5
Positions
-
EU iShares Core MSCI World UCITS ETF USD (Acc)
EUNL - IE00B4L5Y983 50.00% -
VE Vanguard FTSE Developed Europe ex UK UCITS
VERX - IE00BKX55S42 50.00%
This portfolio is split evenly between two ETFs: iShares Core MSCI World UCITS ETF and Vanguard FTSE Developed Europe ex UK UCITS. This structure leans heavily on global equities, focusing primarily on developed markets. Compared to a typical benchmark, this portfolio lacks exposure to emerging markets and alternative asset classes like bonds or real estate. The 50/50 split offers a straightforward approach, but it may not capture the full spectrum of potential growth opportunities. Consider integrating other asset types to enhance diversification and potentially improve risk management.
Growth
Historically, the portfolio has shown a strong CAGR of 10.16%, indicating robust growth over time. A hypothetical investment of €10,000 would have grown significantly over the years. However, the max drawdown of -33.46% highlights exposure to market volatility. Compared to benchmarks, the performance aligns well, though the portfolio's concentrated asset class could increase vulnerability during downturns. To mitigate this, consider diversifying with assets that have different risk-return profiles, such as bonds, which could provide stability during volatile periods.
Projection
The Monte Carlo simulation projects a wide range of potential outcomes using historical data to forecast future performance. With a 50th percentile projection of 253.6% growth, the portfolio shows promising potential. However, remember that these simulations are based on past data and don't guarantee future results. The optimistic forecast suggests maintaining the current structure could be beneficial, but consider periodic reviews to ensure alignment with market conditions and personal goals. A diversified portfolio may help buffer against unforeseen market shifts.
Asset classes
- Stocks 100%
This portfolio is entirely invested in stocks, lacking exposure to other asset classes like bonds or real estate. While stocks offer growth potential, they also come with higher volatility. Compared to diversified benchmarks, this singular focus could increase risk during market downturns. Introducing bonds or other fixed-income assets could help balance the portfolio by providing income and reducing overall volatility. This approach could enhance long-term stability without significantly compromising growth potential.
Sectors
- Financials 19%
- Technology 18%
- Industrials 15%
- Health Care 13%
- Consumer Discretionary 10%
- Consumer Staples 7%
- Telecommunications 6%
- Basic Materials 4%
- Energy 3%
- Utilities 3%
- Real Estate 2%
The portfolio is well-distributed across sectors, with significant allocations in Financial Services (19%), Technology (18%), and Industrials (15%). This sectoral balance aligns closely with global benchmarks, offering a solid base for diversification. However, the tech-heavy allocation might lead to increased volatility, especially during periods of rising interest rates. Consider periodically reviewing sector allocations to ensure they match your risk tolerance and market outlook. A diversified sector approach can help mitigate risks associated with sector-specific downturns.
Regions
- Europe Developed 58%
- North America 38%
- Japan 3%
- Australasia 1%
The geographic allocation heavily favors Europe Developed (58%) and North America (38%), with minimal exposure to other regions. This concentration in developed markets provides stability but misses potential growth opportunities in emerging markets. Compared to global benchmarks, this portfolio is underexposed to Asia and other developing regions. Diversifying geographically could enhance growth potential and reduce reliance on any single economy. Consider gradually increasing exposure to emerging markets to capture diverse economic growth drivers.
Market capitalization
- Mega-cap 48%
- Large-cap 35%
- Mid-cap 16%
The portfolio is predominantly invested in large-cap stocks, with mega-cap (48%) and big-cap (35%) stocks making up the majority. This focus on established companies offers stability and lower volatility compared to smaller-cap stocks. However, it may limit exposure to high-growth opportunities typically found in smaller companies. Introducing medium or small-cap stocks could increase growth potential, albeit with higher risk. Balancing market capitalization can diversify risk and capture a broader range of market opportunities.
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 be optimized for a better risk-return ratio using the Efficient Frontier concept. This optimization involves adjusting current assets to achieve the best possible balance between risk and return. The potential optimized portfolio offers an expected return of 11.88% with a similar risk level. While optimization can enhance efficiency, it should align with your risk tolerance and investment goals. Regularly reassessing asset allocation can ensure the portfolio remains efficient and aligned with market conditions.
Ongoing product costs
- iShares Core MSCI World UCITS ETF USD (Acc) 0.20%
- Vanguard FTSE Developed Europe ex UK UCITS 0.10%
- Weighted costs total (per year) 0.15%
The portfolio boasts a low total expense ratio (TER) of 0.15%, which is favorable for long-term performance. Lower costs mean more of your investment returns stay in your pocket, compounding over time. This cost efficiency aligns well with best practices and supports better net returns. While costs are already low, it's wise to periodically review them to ensure they remain competitive. Consider monitoring TERs across different funds to maintain cost-effectiveness and maximize long-term growth potential.
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