A balanced portfolio with strong tech focus and moderate geographic diversification

Report created on Dec 27, 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 consists of ETFs primarily focused on global equities and bonds, with a notable allocation to technology. The Vanguard FTSE All-World UCITS ETF holds the largest share at 28%, followed by a global bond ETF at 20%. This composition reflects a balanced approach, aiming for growth while maintaining some stability. Compared to common benchmarks, the portfolio leans heavily towards equities, which could lead to higher volatility. It's advisable to monitor this balance to ensure it aligns with your risk tolerance and financial goals, considering potential adjustments to maintain a diversified and stable investment mix.

Growth Info

Historically, the portfolio has performed well, with a CAGR of 11.95%, indicating strong growth over time. A hypothetical investment of €10,000 would have grown significantly, outperforming many standard benchmarks. However, the portfolio also experienced a maximum drawdown of -25.63%, highlighting potential risks during market downturns. While past performance provides insights, it's crucial to remember that it doesn't guarantee future results. To mitigate drawdown risks, consider diversifying further or incorporating more defensive assets to better weather potential market volatility.

Projection Info

The Monte Carlo simulation, which uses historical data to forecast future performance, suggests a wide range of potential outcomes for this portfolio. With 1,000 simulations, the median outcome projects a 368.34% increase, while the worst-case scenario still shows positive returns in 990 simulations. This indicates a strong potential for growth but also underscores the uncertainty inherent in investing. While these projections are useful, they rely on past data and assumptions that may not hold true in the future. Regularly reviewing and adjusting your portfolio can help manage risks and capitalize on opportunities.

Asset classes Info

  • Stocks
    74%
  • Bonds
    20%

The portfolio is heavily weighted towards stocks, comprising approximately 74% of the total allocation, with bonds making up around 20%. This allocation suggests a focus on growth, typical of a balanced investment strategy. Compared to benchmarks, this portfolio may have higher volatility due to its equity concentration. To enhance diversification, consider incorporating a broader range of asset classes, such as real estate or commodities, which can help mitigate risk and improve overall stability, especially during periods of market turbulence.

Sectors Info

  • Technology
    32%
  • Financials
    9%
  • Consumer Discretionary
    6%
  • Industrials
    6%
  • Health Care
    5%
  • Telecommunications
    4%
  • Consumer Staples
    3%
  • Energy
    2%
  • Basic Materials
    2%
  • Utilities
    2%
  • Real Estate
    1%

The technology sector dominates the portfolio, accounting for over 32% of the total allocation. While this can drive growth, it also exposes the portfolio to sector-specific risks, such as regulatory changes or tech market downturns. Other sectors like financial services and consumer cyclicals provide some diversification but remain underrepresented compared to typical benchmarks. To reduce sector concentration risk, consider reallocating some investments to underrepresented sectors, which may offer more stability and opportunities for growth in different economic conditions.

Regions Info

  • North America
    51%
  • Europe Developed
    17%
  • Asia Emerging
    2%
  • Japan
    2%
  • Asia Developed
    1%
  • Australasia
    1%

Geographically, the portfolio is predominantly invested in North America, with over 51% exposure, followed by Europe Developed at 17%. This reflects a significant bias towards established markets, which can provide stability but may limit growth potential from emerging regions. Compared to global benchmarks, the portfolio's geographic diversification is moderate. To enhance diversification and capture growth from diverse economic environments, consider increasing exposure to emerging markets or other underrepresented regions, balancing potential risks with opportunities for higher returns.

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, notably between the Vanguard FTSE All-World UCITS ETF and Vanguard S&P 500 UCITS Acc. High correlation means these assets tend to move together, which can limit diversification benefits. During market downturns, this could result in amplified losses. Reducing correlation can enhance risk management by spreading investments across less correlated assets. Consider replacing or reducing overlapping assets with those that have different performance drivers, potentially improving the portfolio's resilience against market fluctuations.

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's current configuration could benefit from optimization using the Efficient Frontier, which aims to achieve the best possible risk-return ratio. This involves adjusting asset allocations to maximize returns for a given level of risk. However, before optimizing, it’s crucial to address the issue of highly correlated assets, as they may not contribute to diversification. By reducing overlap and considering a broader range of assets, you can potentially enhance the portfolio's efficiency, achieving a more balanced and optimized investment strategy.

Ongoing product costs Info

  • iShares Core Global Aggregate Bond UCITS ETF 0.10%
  • iShares S&P 500 USD Information Technology Sector UCITS 0.15%
  • Vanguard S&P 500 UCITS Acc 0.07%
  • Vanguard FTSE All-World UCITS ETF USD Accumulation 0.22%
  • Xtrackers EURO STOXX 50 UCITS ETF 1C 0.09%
  • Weighted costs total (per year) 0.13%

The portfolio's total expense ratio (TER) is impressively low at 0.13%, indicating cost efficiency. Low costs are beneficial for long-term performance, as they minimize the drag on returns. This aligns well with best practices in portfolio management, ensuring more of your investment gains are retained. While the current costs are favorable, it's essential to regularly review them and explore opportunities to reduce expenses further, such as switching to lower-cost alternatives if available, to maximize returns over time.

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