A conservative portfolio with broad diversification and low risk offering stable returns

Report created on Dec 18, 2024

Risk profile Info

2/7
Conservative
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

This portfolio is structured with a strong emphasis on ETFs, comprising a mix of equities, bonds, and other asset classes. The largest holding is the iShares S&P 500 Swap UCITS ETF USD (Acc), accounting for 28.2% of the portfolio. Bonds make up a significant portion, with the iShares $ Treasury Bond 7-10yr UCITS ETF EUR Hedged (Dist) and other bond ETFs collectively holding a substantial share. This composition indicates a balanced approach, aiming to provide stability and modest growth. A diversified mix of asset classes helps manage risk, which is crucial for conservative investors seeking to preserve capital while achieving steady returns.

Growth Info

Historically, the portfolio has demonstrated a compound annual growth rate (CAGR) of 7.2%, with a maximum drawdown of -8.07%. This suggests that while the portfolio has experienced some volatility, it has generally provided positive returns over time. The days that make up 90% of returns are relatively few, indicating that most of the gains are concentrated in a small number of trading days. Past performance is not a guarantee of future results, but it provides a useful benchmark. Investors should be prepared for potential fluctuations and consider maintaining a long-term perspective to ride out short-term market swings.

Projection Info

Forward projections using Monte Carlo simulations, which run numerous scenarios based on historical data, suggest an annualized return of 4.93%. The simulations indicate a range of outcomes, with the 5th percentile showing a potential loss of -21.07% and the 67th percentile showing gains up to 117.06%. While these projections offer insights into potential future performance, they rely on historical data and assumptions that may not hold true in the future. Investors should use these projections as a guide but remain flexible and ready to adjust their strategies in response to changing market conditions.

Asset classes Info

  • Stocks
    50%
  • Bonds
    35%
  • Other
    5%
  • Cash
    1%

The portfolio's allocation across asset classes includes approximately 49.9% in stocks, 35% in bonds, and smaller portions in other categories. This distribution reflects a conservative strategy, with a strong bond presence providing stability and income, while stocks offer growth potential. Diversification across asset classes helps manage risk by reducing the impact of any single asset class underperforming. Investors should periodically review their asset allocation to ensure it aligns with their risk tolerance and financial goals, making adjustments as necessary to maintain the desired balance.

Sectors Info

  • Technology
    12%
  • Financials
    8%
  • Industrials
    6%
  • Consumer Discretionary
    5%
  • Health Care
    5%
  • Telecommunications
    4%
  • Consumer Staples
    3%
  • Basic Materials
    2%
  • Energy
    2%
  • Utilities
    1%
  • Real Estate
    1%

Sectoral allocation is diverse, with the largest exposure in technology at 11.99%, followed by financial services and industrials. This spread across multiple sectors helps mitigate sector-specific risks, providing a buffer against downturns in any single area. However, the portfolio's limited exposure to certain sectors like energy and utilities may reduce its ability to capitalize on sector-specific growth opportunities. Investors should consider whether this sector allocation aligns with their views on future economic trends and adjust accordingly to capture potential growth while managing risks.

Regions Info

  • North America
    30%
  • Europe Developed
    10%
  • Asia Emerging
    3%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%

Geographically, the portfolio is heavily weighted towards North America, with 29.92% exposure, followed by Europe Developed and Asia Emerging. This geographic spread offers some diversification benefits, but the concentration in North America could expose the portfolio to region-specific risks, such as economic downturns or policy changes. Expanding exposure to underrepresented regions could enhance diversification and reduce reliance on any single market. Investors should assess whether their geographic allocation aligns with their risk tolerance and investment objectives, considering global economic conditions and potential growth areas.

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 can be optimized using the Efficient Frontier, which identifies the best possible risk-return ratio based on current assets. Although the expected return of the optimized portfolio is slightly higher at 2.74%, the risk level remains low at 0.37%. This suggests there may be room to improve returns without significantly increasing risk. Investors should consider rebalancing their holdings to achieve a more efficient allocation, potentially enhancing returns while maintaining a conservative risk profile. Regular reviews and adjustments are essential to ensure the portfolio remains aligned with the investor's objectives.

Dividends Info

  • iShares $ Treasury Bond 7-10yr UCITS ETF EUR Hedged (Dist) 1.80%
  • Weighted yield (per year) 0.25%

The portfolio's overall dividend yield is modest, at 0.25%, with the iShares $ Treasury Bond 7-10yr UCITS ETF EUR Hedged (Dist) contributing a yield of 1.8%. While dividends provide a source of income, the portfolio's focus appears to be more on capital appreciation than income generation. Investors seeking higher income may need to consider reallocating some assets towards higher-yielding investments. However, it is essential to balance the desire for income with the need for growth and preservation of capital, ensuring the portfolio remains aligned with long-term financial goals.

Ongoing product costs Info

  • Invesco Euro Government Bond 1-3 Year UCITS ETF 0.10%
  • Vaneck Vectors UCITS ETFs plc - Vaneck Vectors J.P. Morgan EM Local Currency Bond UCITS ETF 0.30%
  • L&G Asia Pacific ex Japan Equity UCITS ETF 0.10%
  • iShares Euro Corporate Bond 1-5Yr UCITS 0.20%
  • iShares S&P 500 Swap UCITS ETF USD (Acc) 0.07%
  • iShares $ Treasury Bond 7-10yr UCITS ETF EUR Hedged (Dist) 0.10%
  • iShares Euro Ultrashort Bond UCITS 0.09%
  • iShares Core MSCI Emerging Markets IMI UCITS 0.18%
  • iShares MSCI World Small Cap UCITS ETF USD (Acc) 0.35%
  • Amundi Stoxx Europe 600 UCITS ETF C EUR 0.07%
  • Amundi Index Solutions - Amundi Prime Japan UCITS ETF DR (C) 0.05%
  • Xtrackers CSI300 Swap UCITS ETF 1C 0.50%
  • Xtrackers II EUR Overnight Rate Swap UCITS ETF 1C 0.10%
  • Xtrackers Bloomberg Commodity ex-Agriculture & Livestock Swap UCITS ETF 2C USD EUR 0.39%
  • Weighted costs total (per year) 0.11%

The portfolio incurs a total expense ratio (TER) of 0.11%, which is relatively low and beneficial for long-term returns. Lower costs mean a greater portion of returns is retained by the investor, enhancing the compounding effect over time. While the costs are already favorable, investors should remain vigilant for any opportunities to further reduce expenses, such as by selecting lower-cost alternatives or negotiating fees. Keeping costs in check is a crucial aspect of optimizing portfolio performance, especially for conservative investors focused on preserving capital.

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