A globally diversified balanced portfolio with a strong equity focus and moderate risk profile

Report created on Dec 26, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification

Positions

This portfolio is composed of two primary ETFs: Vanguard FTSE All-World UCITS ETF, making up 90%, and iShares Core Global Aggregate Bond UCITS ETF at 10%. This structure leans heavily towards equities, which typically offer higher growth potential but come with increased volatility. The bond allocation provides some stability, cushioning against market fluctuations. Compared to a standard balanced portfolio, which might have closer to a 60/40 equity-bond split, this portfolio is more aggressive. To align with a more traditional balanced approach, consider increasing bond exposure slightly, which might help reduce volatility without significantly sacrificing growth.

Growth Info

Historically, this portfolio has performed well, with a CAGR of 11.38%, indicating strong annual growth over time. However, it also experienced a maximum drawdown of -30.66%, reflecting significant volatility during market downturns. This performance suggests that while the portfolio has the potential for high returns, it also carries considerable risk. Compared to a typical balanced portfolio, this one has shown higher returns but also higher risk. To mitigate potential future drawdowns, consider diversifying further into less volatile asset classes or increasing the bond allocation.

Projection Info

Monte Carlo simulations, which use historical data to predict future outcomes, indicate a wide range of potential returns. With 1,000 simulations, the 5th percentile shows a potential loss of -4.88%, while the median (50th percentile) projects a growth of 109.19%. The 67th percentile suggests a more optimistic outcome of 161.29%. While these projections offer insights, remember that they are based on historical trends and do not guarantee future results. Consider monitoring the portfolio regularly and be prepared to adjust allocations in response to changing market conditions to optimize returns.

Asset classes Info

  • Stocks
    90%
  • Bonds
    10%

The portfolio's asset class distribution is heavily weighted towards stocks at approximately 90%, with bonds making up about 10%. This allocation suggests a focus on growth, with some stability provided by bonds. Compared to a typical balanced portfolio, which might have a more even split, this portfolio is more growth-oriented. While the current allocation aligns with an aggressive growth strategy, consider increasing bond exposure slightly to enhance stability and reduce volatility, especially during market downturns.

Sectors Info

  • Technology
    23%
  • Financials
    15%
  • Health Care
    9%
  • Consumer Discretionary
    9%
  • Industrials
    9%
  • Telecommunications
    7%
  • Consumer Staples
    5%
  • Energy
    4%
  • Basic Materials
    3%
  • Utilities
    3%
  • Real Estate
    2%

The sector allocation is diverse, with technology leading at 23.09%, followed by financial services and healthcare. This distribution is relatively balanced, though the high tech concentration might lead to increased volatility, especially during periods of interest rate hikes. Compared to common benchmarks, this portfolio is well-diversified across sectors, reducing sector-specific risks. However, consider periodically reviewing sector weights to ensure they align with your investment goals and to capitalize on emerging trends without overexposing the portfolio to any single sector.

Regions Info

  • North America
    59%
  • Europe Developed
    13%
  • Asia Emerging
    5%
  • Japan
    5%
  • Asia Developed
    4%
  • Australasia
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is primarily exposed to North America at 58.99%, with Europe Developed and Asia Emerging also represented. This allocation offers substantial diversification, though it leans heavily towards North America, which may increase exposure to regional economic fluctuations. Compared to global benchmarks, this distribution is fairly typical, though underweight in emerging markets. To enhance diversification and reduce regional risks, consider gradually increasing exposure to underrepresented areas like Latin America or Africa/Middle East, which might offer growth opportunities.

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 allocation could potentially be optimized using the Efficient Frontier, which aims to achieve the best possible risk-return ratio. This optimization would focus on reallocating between the existing assets to enhance returns for a given level of risk or reduce risk for a given level of return. While the portfolio is already well-diversified, consider periodically reviewing allocations to ensure they remain efficient and aligned with your risk tolerance and investment goals, especially as market conditions evolve.

Ongoing product costs Info

  • iShares Core Global Aggregate Bond UCITS ETF 0.10%
  • Vanguard FTSE All-World UCITS ETF USD Accumulation 0.22%
  • Weighted costs total (per year) 0.21%

The total expense ratio (TER) of this portfolio is 0.21%, which is impressively low and supports better long-term performance by minimizing costs. Low fees are crucial as they can significantly impact returns over time. Compared to industry averages, this cost structure is efficient and aligns with best practices in cost management. Continue monitoring for any changes in fees, and periodically evaluate whether lower-cost alternatives could further enhance net returns without compromising on the portfolio's strategic objectives or diversification.

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