Simple two fund global equity portfolio with strong efficiency and mild home bias tilt
Report created on May 4, 2024Risk profile
4/7
Diversification profile
3/5
Positions
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SP SPDR S&P 500 UCITS ETF USD Acc EUR
SPYL - IE000XZSV718 56.00% -
VG Vanguard FTSE All-World UCITS ETF
VGWL - IE00B3RBWM25 44.00%
The structure is extremely simple: two broad equity ETFs make up 100% of the portfolio, with a slight majority in a fund tracking large US companies and the rest in a global all‑world fund. This kind of “core and core-plus” setup is easy to understand and maintain, which matters a lot for staying the course over time. With just two diversified building blocks, it avoids the clutter and overlap that can creep into portfolios with many line items. The main takeaway is that this is a clean, equity‑only framework that trades granular control for simplicity and broad exposure, which is often a positive trade‑off for long‑term investors.
Growth
Over the sample period, $1,000 grew to about $1,436, with a compound annual growth rate (CAGR) of 16.15%. CAGR is the “average yearly speed” of growth over time. The portfolio’s maximum drawdown of roughly -22% shows that equity downturns have been meaningful but not extreme by stock‑market standards. Compared with US and global benchmarks, performance lagged by about 3.5–3.7% per year, while drawdowns were slightly deeper. This difference isn’t huge over such a short window, and past returns over just a couple of years are not reliable guides to the future, but it does signal that recent conditions favoured the benchmarks a bit more.
Asset classes
- Stocks 100%
All assets are in stocks, with no bonds, cash, or alternatives. That makes the portfolio very growth‑oriented and straightforward, but it also means there’s no built‑in cushion for market downturns. Asset classes behave differently in various environments; for example, high‑quality bonds often hold up better when stocks fall, helping to smooth overall returns. Staying 100% in equities can be sensible for long horizons and higher risk tolerance, yet it demands emotional resilience and the ability to ignore interim losses. The absence of defensive assets is the main driver behind both the higher long‑term growth potential and the sharper drawdowns you should expect.
Sectors
- Technology 30%
- Financials 14%
- Consumer Discretionary 10%
- Industrials 10%
- Telecommunications 10%
- Health Care 9%
- Consumer Staples 5%
- Energy 4%
- Basic Materials 3%
- Utilities 3%
- Real Estate 2%
Sector exposure is broad, with notable weight in technology and healthy slices across financials, consumer businesses, industrials, and communication‑related companies. A roughly 30% allocation to tech‑related firms is in line with many modern equity benchmarks, reflecting how large these companies have become in global markets. This alignment with broad indexes is a strong indicator of reasonable diversification across economic areas. The implication is that returns will likely be sensitive to tech cycles and interest‑rate moves, but not exclusively driven by any single sector. Overall, the sector mix looks balanced, supporting a good blend of growth potential and exposure to more traditional, cash‑generative industries.
Regions
- North America 83%
- Europe Developed 7%
- Japan 3%
- Asia Developed 3%
- Asia Emerging 2%
- Australasia 1%
- Africa/Middle East 1%
Geographically, there is a clear tilt toward North America at about 83%, with relatively modest allocations to Europe, Asia, and other regions. This goes beyond strict global‑market weights and leans into a home‑bias pattern that many investors share. The benefit is greater exposure to markets that have been strong and are very deep and liquid. The trade‑off is that results may be more tied to one region’s economic and policy backdrop, including currency and interest‑rate shifts. For investors wanting more global balance, nudging weights toward underrepresented regions can improve diversification, but the current setup is still reasonably aligned with real‑world market capitalization.
Market capitalization
- Mega-cap 47%
- Large-cap 35%
- Mid-cap 17%
- Small-cap 1%
The market‑cap breakdown is dominated by mega‑cap and large‑cap companies, with smaller but meaningful exposure to mid‑caps and a tiny slice of small‑caps. Large and mega‑caps tend to be more stable and widely followed, which can reduce single‑company risk compared with a heavy small‑cap tilt. Mid‑caps and small‑caps add some extra growth potential and diversification because they often move differently across cycles. This structure mirrors many mainstream indices, which is a positive sign for broad diversification. It means performance will be driven mainly by the world’s biggest listed businesses, with a mild growth kicker from mid‑sized firms rather than a strong small‑cap bet.
True holdings
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NV NVIDIA Corporation 5.93%
Part of fund(s):- SPDR S&P 500 UCITS ETF USD Acc EUR
- Vanguard FTSE All-World UCITS ETF
-
AA Apple Inc 5.42%
Part of fund(s):- SPDR S&P 500 UCITS ETF USD Acc EUR
- Vanguard FTSE All-World UCITS ETF
-
MS Microsoft Corporation 4.07%
Part of fund(s):- SPDR S&P 500 UCITS ETF USD Acc EUR
- Vanguard FTSE All-World UCITS ETF
-
AM Amazon.com Inc 2.84%
Part of fund(s):- SPDR S&P 500 UCITS ETF USD Acc EUR
- Vanguard FTSE All-World UCITS ETF
-
GO Alphabet Inc Class A 2.53%
Part of fund(s):- SPDR S&P 500 UCITS ETF USD Acc EUR
- Vanguard FTSE All-World UCITS ETF
-
AV Broadcom Inc 2.09%
Part of fund(s):- SPDR S&P 500 UCITS ETF USD Acc EUR
- Vanguard FTSE All-World UCITS ETF
-
GO Alphabet Inc Class C 2.03%
Part of fund(s):- SPDR S&P 500 UCITS ETF USD Acc EUR
- Vanguard FTSE All-World UCITS ETF
-
ME Meta Platforms Inc. 1.97%
Part of fund(s):- SPDR S&P 500 UCITS ETF USD Acc EUR
- Vanguard FTSE All-World UCITS ETF
-
TS Tesla Inc 1.58%
Part of fund(s):- LS 1x Tesla Tracker ETP Securities GBP
- SPDR S&P 500 UCITS ETF USD Acc EUR
- Vanguard FTSE All-World UCITS ETF
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BR Berkshire Hathaway Inc 0.88%
Part of fund(s):- SPDR S&P 500 UCITS ETF USD Acc EUR
- Top 10 total 29.32%
Looking through the ETFs, the largest underlying exposures cluster in the biggest global companies, especially a handful of major tech and platform firms. The same names appear via both funds, creating hidden concentration even though there are only two ETFs. Overlap analysis here is based only on top‑10 holdings, so real overlap is likely higher, but even this partial view shows several positions near or above 2–6% of the total portfolio. This is typical for market‑cap‑weighted equity portfolios today, not a flaw, but it means short‑term results can be strongly influenced by how this small group of giants performs.
Factors
Factor exposures are estimated using statistical models based on historical data and measure systematic (market-relative) tilts, not absolute portfolio characteristics. Results may vary depending on the analysis period, data availability, and currency of the underlying assets.
Factor exposure shows a very high tilt toward low volatility, with other factors like value, size, quality, and yield sitting near neutral and momentum moderately elevated. Factors are like “personality traits” of a portfolio that help explain why it behaves a certain way. A strong low‑volatility tilt suggests the holdings, on average, have historically fluctuated less than the market, which can help in rough patches but might lag in sharp, speculative rallies. The reasonably high momentum exposure indicates that many holdings have been recent winners, which often helps in trending markets but can hurt during sudden reversals. Overall, it’s a growth‑oriented, slightly smoother‑ride profile.
Risk contribution
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SPDR S&P 500 UCITS ETF USD Acc EUR
Weight: 56.00% 58.8% -
Vanguard FTSE All-World UCITS ETF
Weight: 44.00% 41.2%
Risk contribution measures how much each ETF drives the portfolio’s overall ups and downs, which can differ from simple weights. Here, the S&P 500 fund is 56% of the capital but contributes about 59% of the total risk, while the all‑world fund contributes slightly less risk than its 44% weight. This is a very mild imbalance and signals that neither position is excessively dominating risk. When a holding’s risk contribution grows far above its weight, trimming or pairing it with less‑correlated assets can help restore balance. In this case, the risk distribution is already very reasonable for a two‑fund setup.
Redundant positions
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High correlationVanguard FTSE All-World UCITS ETFSPDR S&P 500 UCITS ETF USD Acc EUR
The two ETFs are highly correlated, moving together most of the time with a correlation of about 0.97. Correlation ranges from -1 to +1 and shows how similarly assets move; near +1 means they largely rise and fall together. That limits diversification benefits between these particular funds, since both are broad, market‑cap‑weighted global equity baskets with a heavy US overlap. This isn’t inherently a problem, because each fund is very diversified inside itself, but owning both doesn’t dramatically smooth the ride compared with holding just one core equity fund. The main role of the second ETF is to tweak regional and market‑cap exposure rather than reduce 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.
On the risk‑return chart, the portfolio sits essentially on the efficient frontier, with a Sharpe ratio close to the maximum available from these two holdings. The Sharpe ratio compares return to volatility, like measuring how much “reward” you get per unit of “bumpiness.” Being on the frontier means that, given just these funds, there isn’t a clearly better mix that would boost expected return without also increasing risk. In fact, the optimal and minimum‑variance portfolios are almost identical to the current one, which is a strong sign of efficiency. The main lever for changing the experience would be adding or removing asset classes, not tinkering with these weights.
Dividends
- Vanguard FTSE All-World UCITS ETF 0.60%
- Weighted yield (per year) 0.26%
The dividend yield for the overall portfolio is modest, well below 1% annually. Dividends are cash payments companies make to shareholders, and over very long periods they can contribute significantly to total return. In this setup, though, the focus is clearly on capital growth rather than income. That fits well with an accumulation‑style strategy where dividends are automatically reinvested, compounding over time. For investors seeking current income to spend, this yield level would likely feel low, but for growth‑minded savers, it keeps the emphasis on companies that reinvest more of their profits back into the business, potentially boosting long‑term appreciation.
Ongoing product costs
- Vanguard FTSE All-World UCITS ETF 0.19%
- Weighted costs total (per year) 0.08%
Costs are impressively low, with a blended ongoing fee under 0.10% per year. The total expense ratio (TER) is what the fund provider charges annually, taken directly out of returns, so keeping it low is like reducing friction on a moving car. Over decades, even a 0.5%–1% difference in yearly fees can add up to a substantial gap in final wealth. This portfolio is very well aligned with best practices on cost control, which supports better long‑term outcomes without requiring any extra effort. Low costs are one of the few factors investors can reliably control, and here that box is clearly ticked.
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