A balanced portfolio with a strong focus on global equities and moderate risk exposure

Report created on Dec 24, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

This portfolio is heavily dominated by equity ETFs, with iShares Core MSCI World UCITS ETF making up over 83%. This suggests a strong focus on global equity markets. Vanguard FTSE Emerging Markets and VanEck Semiconductor ETFs add some diversity, but their smaller allocations limit their impact. Typically, balanced portfolios include a mix of stocks, bonds, and other assets to manage risk. The current composition leans towards growth, which may suit investors seeking higher returns but comes with increased volatility.

Growth Info

Historically, the portfolio has performed well, with a Compound Annual Growth Rate (CAGR) of 14.71%. This means the investment has grown significantly over time, outperforming many benchmarks. However, it also experienced a maximum drawdown of nearly 18%, indicating periods of significant value loss. While past performance is not indicative of future results, it provides a useful benchmark. Investors should be aware of the potential for similar downturns and consider their risk tolerance accordingly.

Projection Info

Forward projections using Monte Carlo simulations indicate a wide range of potential outcomes. With 1,000 simulations, the portfolio's annualized return is estimated at 16.45%. The 5th percentile suggests a potential gain of 70.04%, while the 67th percentile indicates 835.52%. These projections are based on historical data and assume similar market conditions in the future. It's important to remember that such simulations are hypothetical and do not guarantee future performance. Investors should use these projections to understand potential risks and returns.

Asset classes Info

  • Stocks
    100%

The portfolio is almost entirely composed of stocks, accounting for over 99% of its allocation. This heavy concentration in equities may lead to higher volatility and risk. Typically, balanced portfolios include bonds and other asset classes to mitigate risk. The minimal presence of cash and bonds suggests a focus on capital growth rather than income or stability. Investors seeking to reduce volatility might consider increasing exposure to bonds or other non-equity assets to achieve a more diversified risk profile.

Sectors Info

  • Technology
    31%
  • Financials
    15%
  • Consumer Discretionary
    10%
  • Health Care
    9%
  • Industrials
    9%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    2%

Sector allocation is skewed towards technology, which comprises over 31% of the portfolio. This concentration could lead to higher volatility, especially during periods of tech market downturns. Financial services and consumer cyclicals are also significant, providing some diversification. Compared to common benchmarks, this sector distribution is tech-heavy. Investors should be aware of the potential for sector-specific risks and consider diversifying into underrepresented sectors to balance exposure and reduce reliance on tech performance.

Regions Info

  • North America
    69%
  • Europe Developed
    13%
  • Asia Emerging
    6%
  • Japan
    4%
  • Asia Developed
    3%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is heavily weighted towards North America, which accounts for over 69% of the allocation. This focus may expose the portfolio to risks specific to the North American market. While Europe and Asia provide some diversification, their smaller allocations limit their impact. Compared to global benchmarks, this geographic distribution is less diversified. Investors might consider increasing exposure to regions like Europe and emerging markets to achieve a more balanced global footprint and mitigate regional risks.

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 along the Efficient Frontier, which means adjusting the current assets to achieve the best possible risk-return ratio. This involves reallocating among existing ETFs to maximize returns for a given level of risk. However, optimizing for the Efficient Frontier doesn't necessarily mean adding new assets or achieving broader diversification. Investors should consider whether their risk tolerance aligns with the optimized portfolio and adjust allocations to meet their specific investment goals.

Ongoing product costs Info

  • iShares Core MSCI World UCITS ETF USD (Acc) 0.20%
  • Vanguard FTSE Emerging Markets UCITS 0.22%
  • VanEck Semiconductor UCITS ETF 0.35%
  • Weighted costs total (per year) 0.21%

The portfolio's total expense ratio (TER) is relatively low at 0.21%, which is beneficial for long-term performance. Lower costs mean more of the investment returns stay in the portfolio rather than being eroded by fees. This cost efficiency is a strong point, aligning with best practices for maximizing returns. Investors should continue to monitor costs and consider replacing higher-fee assets with lower-cost alternatives if available. Maintaining a low-cost structure is crucial for optimizing long-term growth.

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