A balanced portfolio with strong tech focus and limited regional diversification

Report created on Jan 22, 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 ETFs, with Vanguard S&P 500 UCITS Acc making up 46.12% and iShares MSCI World Information Technology Sector ESG UCITS ETF USD Inc at 38%. This composition indicates a strong preference for broad market exposure and technology. While this allocation offers potential growth, it lacks diversification in asset classes like bonds or cash, which could provide stability during market downturns. Considering a more varied asset mix might help balance growth and risk.

Growth Info

Historically, the portfolio has performed well, with a Compound Annual Growth Rate (CAGR) of 19.88%. This impressive growth suggests strong past market conditions and effective asset selection. However, it's important to remember that past performance, while informative, does not guarantee future results. Comparing this to benchmarks can help assess relative performance, but the high max drawdown of -21.42% suggests potential volatility. Diversifying into less volatile assets might reduce future drawdowns.

Projection Info

Forward projections using Monte Carlo simulations indicate a wide range of potential outcomes, with a 50th percentile return of 401.8% and a 5th percentile of -15.8%. Monte Carlo simulations use historical data to estimate future performance, but they are not foolproof predictions. The high variability underscores the importance of considering different scenarios. Regularly reviewing and adjusting the portfolio based on changing market conditions can help mitigate risks and capitalize on opportunities.

Asset classes Info

  • Stocks
    100%

The portfolio is entirely composed of stocks, offering no exposure to bonds, cash, or other asset classes. While stocks can provide high returns, they also carry significant risk. Diversifying into other asset classes could help manage risk and provide income through interest or dividends. For a balanced investor, incorporating some fixed-income securities might stabilize returns and reduce overall portfolio volatility.

Sectors Info

  • Technology
    56%
  • Industrials
    10%
  • Financials
    7%
  • Consumer Discretionary
    6%
  • Health Care
    5%
  • Telecommunications
    5%
  • Utilities
    4%
  • Consumer Staples
    3%
  • Energy
    2%
  • Real Estate
    1%
  • Basic Materials
    1%

With 56% of the portfolio in technology, there's a significant sector concentration. This can lead to higher volatility, especially during periods of tech market instability, like interest rate hikes. While tech has been a strong performer, diversifying into other sectors could reduce risk and smooth returns. Balancing sector exposure can help protect against downturns in any single industry, ensuring more consistent portfolio performance over time.

Regions Info

  • North America
    83%
  • Europe Developed
    14%
  • Japan
    2%

The portfolio is predominantly focused on North America, with 83% exposure, and limited diversification across other regions. This concentration can lead to geographic risk if the North American market underperforms. Expanding exposure to other regions, such as Europe or emerging markets, could enhance diversification and tap into different economic growth cycles. This approach may provide a buffer against regional market downturns.

Market capitalization Info

  • Mega-cap
    43%
  • Large-cap
    42%
  • Mid-cap
    15%

The portfolio is well-distributed across mega and big-cap stocks, with 43% and 42% respectively, but lacks exposure to smaller companies. Large-cap stocks tend to offer stability and dividends, while small- and mid-cap stocks can provide growth opportunities. Adding some small- and mid-cap stocks could boost growth potential and enhance diversification, though they come with higher risk. Balancing market cap exposure can optimize risk-return dynamics.

Redundant positions Info

  • Vanguard S&P 500 UCITS Acc
    iShares Core MSCI World UCITS ETF USD (Acc)
    High correlation

The portfolio includes highly correlated assets like Vanguard S&P 500 UCITS Acc and iShares Core MSCI World UCITS ETF USD (Acc). High correlation means these assets tend to move in the same direction, reducing diversification benefits. During market downturns, this can lead to larger losses. To improve risk management, consider replacing or rebalancing these assets with less correlated alternatives, enhancing the portfolio's resilience to market volatility.

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 using the Efficient Frontier, which seeks the best risk-return ratio with the current assets. However, the presence of highly correlated assets limits diversification. Adjusting allocations to include less correlated assets can improve efficiency. This approach focuses on maximizing returns for a given level of risk, ensuring the portfolio is well-positioned to achieve financial goals while managing downside exposure.

Dividends Info

  • iShares MSCI World Information Technology Sector ESG UCITS ETF USD Inc 0.40%
  • iShares Global Clean Energy UCITS 1.30%
  • Weighted yield (per year) 0.17%

The portfolio's overall dividend yield is modest at 0.17%, with only minor contributions from select ETFs. Dividends can provide a steady income stream, beneficial for reinvestment or income-focused strategies. While growth is prioritized here, incorporating higher-yielding assets might balance growth with income. This could be particularly useful for investors nearing retirement or seeking regular cash flow without selling assets.

Ongoing product costs Info

  • iShares MSCI World Information Technology Sector ESG UCITS ETF USD Inc 0.25%
  • iShares Core MSCI World UCITS ETF USD (Acc) 0.20%
  • iShares Global Clean Energy UCITS 0.65%
  • Vanguard S&P 500 UCITS Acc 0.07%
  • Weighted costs total (per year) 0.15%

The portfolio's total expense ratio (TER) is 0.15%, which is relatively low and beneficial for long-term returns. Lower costs mean more of your returns stay in your pocket. This aligns well with best practices for cost efficiency in investing. Keeping costs low is a positive factor, but it's important to ensure that low-cost funds also meet your investment goals and risk tolerance.

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