A globally diversified ETF portfolio with a strong focus on North American equities

Report created on Jan 6, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

This portfolio consists of a single ETF, the Vanguard FTSE All-World UCITS ETF, which provides broad exposure to global equities. The ETF covers numerous sectors and geographic regions, making it a comprehensive choice for diversification. However, being solely invested in one financial product may limit the portfolio's flexibility to adjust to specific market conditions. While the broad diversification within the ETF is a strength, investors might consider adding other asset types or ETFs to enhance diversification and manage risk more effectively.

Growth Info

The portfolio's historical performance is quite impressive, with a Compound Annual Growth Rate (CAGR) of 12.94%. This indicates solid growth over time, outperforming many traditional investment vehicles. The maximum drawdown of -33.45% highlights the potential for significant short-term losses, which is common in equity-heavy portfolios. Comparing this to a balanced benchmark, the portfolio shows higher volatility but also greater returns. Investors should be prepared for potential fluctuations and ensure that their risk tolerance aligns with these characteristics.

Projection Info

The Monte Carlo simulation, which uses historical data to project future outcomes, suggests a favorable outlook for this portfolio. With 1,000 simulations, the annualized return is estimated at 13.5%, and the majority of simulations predict positive returns. However, it's important to remember that simulations are based on past data and assumptions, which may not hold true in the future. The projections provide a useful guide but should be interpreted with caution, considering potential market changes and unforeseen events.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted in stocks, with 99.95% allocated to this asset class. This concentration in equities offers high growth potential but also exposes the portfolio to greater volatility. Compared to a balanced benchmark, this allocation leans towards a more aggressive investment strategy. To mitigate risk, investors might consider diversifying into other asset classes, such as bonds or real estate, which can provide stability and reduce overall portfolio volatility during market downturns.

Sectors Info

  • Technology
    26%
  • Financials
    16%
  • Health Care
    11%
  • Consumer Discretionary
    10%
  • Industrials
    10%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    4%
  • Utilities
    3%
  • Real Estate
    2%

Sector allocation in this portfolio is diverse, with a significant tilt towards technology at 25.65%. This sector's prominence reflects its recent strong performance and growth potential. However, it also introduces higher risk, as tech stocks can be volatile, especially during economic shifts or interest rate changes. Balancing sector weights can help manage risk, and investors might explore increasing exposure to underrepresented sectors like energy or utilities to achieve a more balanced sector distribution.

Regions Info

  • North America
    66%
  • Europe Developed
    14%
  • Asia Emerging
    6%
  • Japan
    6%
  • Asia Developed
    4%
  • Australasia
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%

The geographic allocation is predominantly North American at 65.54%, which aligns with the weight of this region in global markets. While this provides exposure to a robust and mature market, it also means the portfolio is highly sensitive to economic changes in North America. Investors might consider increasing exposure to emerging markets or other regions to enhance diversification and capture growth opportunities outside of North America, thus reducing regional risk concentration.

Ongoing product costs Info

  • Vanguard FTSE All-World UCITS ETF USD Accumulation 0.22%
  • Weighted costs total (per year) 0.22%

The portfolio's total expense ratio (TER) is 0.22%, which is relatively low and supports better long-term performance by minimizing costs. Low fees are a significant advantage, as they allow more of the portfolio's returns to be reinvested. Investors should regularly review costs to ensure they remain competitive and consider lower-cost alternatives if available. Keeping expenses in check is a key factor in maximizing net returns over time.

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