A balanced global ETF portfolio with significant exposure to technology and North America

Report created on Jan 14, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio is composed primarily of four ETFs, with the Vanguard S&P 500 UCITS ETF holding the largest share at 37.2%. Other significant holdings include the Vanguard FTSE Emerging Markets ETF at 25.1%, Vanguard FTSE All-World ETF at 19.1%, and Invesco EQQQ NASDAQ-100 ETF at 18.6%. This composition leans heavily towards equities, reflecting a focus on growth. Compared to common benchmarks, this allocation is moderately diversified but has a strong emphasis on large-cap U.S. equities. Consider balancing this with more diverse asset classes to reduce potential volatility and enhance stability.

Growth Info

Historically, the portfolio has performed well, achieving a Compound Annual Growth Rate (CAGR) of 13.64%. This indicates robust growth, especially when compared to market benchmarks. However, it's important to note the maximum drawdown of -25.32%, highlighting potential volatility during market downturns. Such performance trends underscore the importance of maintaining a diversified portfolio to manage risk. Consider strategies to mitigate drawdowns, such as incorporating more defensive assets or adjusting allocations to reduce exposure to high-volatility sectors.

Projection Info

Forward projections using Monte Carlo simulations suggest a range of potential outcomes, with a median expected growth of 432.26%. Monte Carlo analysis uses historical data to simulate thousands of potential future scenarios, offering a probabilistic view of returns. While these projections are promising, it's crucial to remember that they are based on past data and not guarantees of future performance. Regularly review and adjust the portfolio to align with changing market conditions and personal investment goals.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted towards stocks, with 99.99% of assets in equities. This concentration in a single asset class exposes the portfolio to market volatility but also offers higher growth potential. Compared to a balanced benchmark, this allocation lacks diversification across asset classes like bonds or real estate. Diversifying into other asset classes could help mitigate risk and smooth returns over time, especially during periods of stock market downturns.

Sectors Info

  • Technology
    32%
  • Financials
    14%
  • Consumer Discretionary
    12%
  • Telecommunications
    10%
  • Health Care
    8%
  • Industrials
    7%
  • Consumer Staples
    6%
  • Energy
    3%
  • Basic Materials
    3%
  • Utilities
    3%
  • Real Estate
    2%

Sector allocation is heavily skewed towards technology, which comprises 32% of the portfolio. Other notable sectors include financial services and consumer cyclicals. This tech-heavy focus could lead to higher volatility, particularly during interest rate hikes or regulatory changes. Aligning sector weights with broader benchmarks might enhance diversification. Consider reducing concentration in technology and increasing exposure to underrepresented sectors to better balance risk and potential returns.

Regions Info

  • North America
    68%
  • Asia Emerging
    16%
  • Asia Developed
    6%
  • Europe Developed
    3%
  • Africa/Middle East
    3%
  • Latin America
    2%
  • Japan
    1%

The portfolio's geographic exposure is concentrated in North America, accounting for nearly 68% of holdings. Emerging markets in Asia represent the next largest allocation at 16%. While this offers exposure to high-growth regions, the heavy North American focus may limit diversification benefits. To achieve a more balanced global exposure, consider increasing allocations to regions such as Europe or Japan. This could reduce geographic risk and capture growth opportunities in other developed markets.

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 asset allocation can be optimized using the Efficient Frontier, a method that identifies the best possible risk-return ratio. This involves adjusting the weights of existing assets to achieve an optimal balance. While this doesn't necessarily imply diversification, it ensures the portfolio is positioned for the best risk-adjusted returns given its current holdings. Regularly reassess and rebalance the portfolio to maintain this efficiency as market conditions evolve.

Ongoing product costs Info

  • Invesco EQQQ NASDAQ-100 UCITS ETF (GBP Hdg) 0.35%
  • Vanguard S&P 500 UCITS Acc 0.07%
  • Vanguard FTSE All-World UCITS ETF USD Accumulation 0.22%
  • Weighted costs total (per year) 0.13%

The portfolio's total expense ratio (TER) is 0.13%, which is relatively low and supports better long-term net returns. Low costs are advantageous as they minimize the drag on portfolio performance over time. However, the Invesco EQQQ NASDAQ-100 ETF has a higher expense ratio of 0.35%. Consider evaluating whether lower-cost alternatives could achieve similar exposure, thereby further reducing overall costs and enhancing net returns.

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