A balanced ESG-focused ETF portfolio with strong North American and European exposure

Report created on Dec 30, 2024

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 two ESG-screened ETFs, with 66% in the USA and 34% in Europe. This composition leans heavily on equities, offering exposure to large, established markets. The portfolio's balanced risk profile aligns well with a moderately diversified stance, yet its focus on two regions may limit global diversification. Consider integrating additional asset types or regions to enhance diversification and potentially mitigate risk.

Growth Info

Historically, the portfolio has delivered impressive growth, with a CAGR of 15.13%. This indicates strong past performance compared to typical balanced portfolios. However, a max drawdown of -33.83% suggests significant volatility during downturns. While historical performance can provide insights, remember that past results don't guarantee future success. Keeping an eye on market trends and adjusting as needed can help manage risks.

Projection Info

Forward projections using Monte Carlo simulations show a wide range of potential outcomes, with a median expected return of 485.89% over the investment horizon. This method uses historical data to simulate future performance, but it's important to note that these are hypothetical and not guaranteed. The high number of simulations with positive returns is encouraging, suggesting resilience. Regularly reviewing projections can help in realigning with investment goals.

Asset classes Info

  • Stocks
    100%

The portfolio is almost entirely composed of stocks, with negligible allocations to cash, bonds, and other assets. This high equity concentration may contribute to volatility but also offers growth potential. Compared to typical balanced portfolios, which include more bonds and cash, this portfolio is more aggressive. Incorporating more diverse asset classes could reduce risk and provide more stability during market fluctuations.

Sectors Info

  • Technology
    27%
  • Financials
    17%
  • Health Care
    13%
  • Consumer Discretionary
    11%
  • Industrials
    10%
  • Telecommunications
    8%
  • Consumer Staples
    4%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    2%
  • Energy
    2%

The portfolio's sector allocation is led by technology at 26.63%, followed by financial services and healthcare. This distribution is in line with many global benchmarks, providing a good mix of growth and stability. However, the tech-heavy focus may increase volatility, especially during economic shifts. Balancing sector weights by introducing more defensive sectors could enhance stability and reduce risk.

Regions Info

  • North America
    66%
  • Europe Developed
    34%

Geographically, the portfolio is concentrated in North America and Europe, with over 99% of assets in these regions. This focus aligns with developed market benchmarks, offering stability and growth. However, the lack of emerging market exposure may limit potential opportunities. Considering adding some exposure to emerging markets could improve diversification and offer higher growth potential.

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 benefit from optimization using the Efficient Frontier, which seeks the best risk-return balance with current assets. This process identifies potential allocation changes to improve efficiency. While efficiency focuses on the best risk-return ratio, it may not address diversification. Regular optimization reviews can ensure the portfolio remains aligned with evolving market conditions.

Ongoing product costs Info

  • iShares MSCI USA ESG Screened UCITS ETF 0.07%
  • iShares MSCI Europe ESG Screened UCITS ETF 0.12%
  • Weighted costs total (per year) 0.09%

The portfolio's total expense ratio (TER) is low at 0.09%, which is favorable for long-term growth. Lower costs mean more returns stay in your pocket, enhancing compounding effects over time. This efficient cost structure aligns well with best practices, so maintaining low-cost investments is a smart strategy.

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