A balanced portfolio with strong U.S. focus and moderate European diversification

Report created on Apr 1, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio is heavily weighted towards equities, with a significant 50% allocation to the iShares Core S&P 500 UCITS ETF. This indicates a strong focus on U.S. large-cap stocks. The remaining assets are primarily European-focused, with 30% in the Xtrackers - Stoxx Europe 600 UCITS ETF, and smaller allocations to European financials and global healthcare. This composition suggests a balanced approach, attempting to capture growth from developed markets. It's important to compare this structure with a global index to ensure alignment with broader market trends. Consider diversifying further by exploring other regions or asset classes to enhance risk management.

Growth Info

Historically, the portfolio has delivered a commendable CAGR of 11.92%, which is competitive when compared to major global indices. However, it experienced a maximum drawdown of -34.15%, highlighting the potential volatility during market downturns. This performance indicates the portfolio's ability to generate substantial returns over the long term, albeit with notable risk. Understanding past performance helps gauge future expectations, but it's crucial to remember that historical results do not guarantee future outcomes. Regularly reviewing performance against benchmarks can ensure alignment with investment goals.

Projection Info

The Monte Carlo simulation, a method using historical data to project future outcomes, suggests a positive outlook for the portfolio, with an impressive median projection of 321.9% growth. This analysis shows a high likelihood of positive returns, with 984 out of 1,000 simulations yielding gains. However, it's important to acknowledge that these projections are based on past data and assumptions, which may not fully capture future market conditions. Adjusting allocations in response to changing economic landscapes could enhance potential outcomes.

Asset classes Info

  • Stocks
    100%

The portfolio is entirely invested in stocks, offering no exposure to bonds or alternative assets. While equities can drive growth, this lack of diversification across asset classes may increase volatility and risk, especially during market downturns. A more balanced allocation, including bonds or alternative investments, could provide stability and income, potentially smoothing overall returns. Comparing this allocation with a benchmark can help determine if adjustments are needed to align with risk tolerance and investment goals.

Sectors Info

  • Financials
    23%
  • Health Care
    20%
  • Technology
    18%
  • Industrials
    10%
  • Consumer Discretionary
    8%
  • Telecommunications
    6%
  • Consumer Staples
    6%
  • Energy
    3%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    1%

The sector allocation shows a strong emphasis on financial services (23%) and healthcare (20%), with significant exposure to technology (18%). This sectoral concentration can lead to higher volatility, as these sectors may react differently to economic cycles. A tech-heavy portfolio, for instance, might face challenges during interest rate hikes. Ensuring a well-rounded sectoral distribution can mitigate risks associated with specific industry downturns. Regularly reviewing sector trends and adjusting allocations accordingly can maintain a balanced risk-return profile.

Regions Info

  • North America
    57%
  • Europe Developed
    42%

The portfolio's geographic allocation is heavily tilted towards North America (57%), followed by Europe (42%). This focus on developed markets can provide stability but limits exposure to emerging markets, which may offer higher growth potential. Comparing this geographic distribution to global benchmarks can highlight areas for improvement. Diversifying into other regions, such as Asia or emerging markets, could enhance growth prospects and reduce reliance on a single economic region.

Market capitalization Info

  • Mega-cap
    47%
  • Large-cap
    36%
  • Mid-cap
    16%
  • Small-cap
    1%

The portfolio predominantly invests in mega-cap (47%) and big-cap (36%) stocks, with minimal exposure to small caps (1%). This concentration in larger companies often provides stability and lower volatility, but it may miss out on the higher growth potential typically associated with smaller companies. A more balanced approach, including medium and small caps, could enhance diversification and potential returns. Regularly reviewing market cap allocation can ensure alignment with investment objectives and risk tolerance.

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 potentially benefit from optimization using the Efficient Frontier, which seeks the best possible risk-return ratio. By adjusting current allocations, the portfolio can aim for a more efficient balance, maximizing returns for a given level of risk. This process involves analyzing the current assets and reallocating them to achieve an optimal mix. Regularly revisiting this optimization can ensure the portfolio remains aligned with evolving market conditions and investment goals.

Ongoing product costs Info

  • Xtrackers - Stoxx Europe 600 UCITS ETF 0.25%
  • SPDR® MSCI Europe Financials UCITS ETF 0.18%
  • iShares Core S&P 500 UCITS ETF USD (Acc) 0.12%
  • Xtrackers MSCI World Health Care UCITS ETF 1C 0.25%
  • Weighted costs total (per year) 0.18%

The portfolio's total expense ratio (TER) of 0.18% is impressively low, supporting better long-term performance by minimizing costs. This efficient cost structure aligns well with best practices, ensuring more of the investment returns are retained. Regularly reviewing and managing costs can further enhance returns, especially in a low-return environment. Maintaining this cost efficiency is crucial for optimizing long-term growth.

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