A balanced portfolio with strong US focus and tech sector dominance

Report created on Dec 11, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

This portfolio is heavily weighted towards two ETFs, with 75% in the Vanguard S&P 500 UCITS Acc and 25% in the Vanguard ESG Global All Cap UCITS ETF. This composition indicates a strong preference for established, large-cap US equities, given the S&P 500's focus. The inclusion of the ESG ETF suggests a tilt towards socially responsible investing. A concentrated allocation in these two funds may limit diversification, but offers simplicity and low management costs. To enhance diversification, consider adding assets from different classes or regions to balance the portfolio's risk and return potential.

Growth Info

Historically, the portfolio has shown a compounded annual growth rate (CAGR) of 15.73%, reflecting strong past performance, particularly driven by US equities. However, the maximum drawdown of -17.74% highlights the potential for significant losses during market downturns. While past performance is not indicative of future results, it provides insight into how the portfolio has reacted to market volatility. Investors should be mindful of the possibility of similar drawdowns in the future and consider strategies to mitigate such risks, like diversifying across more asset classes.

Projection Info

Using Monte Carlo simulations, the portfolio's future performance was projected, with results showing a median outcome of 575.38% growth. Monte Carlo simulations use historical data to model potential future outcomes, but they cannot predict specific future events or market conditions. While all simulations resulted in positive returns, suggesting a strong probability of growth, the range of outcomes indicates varying levels of risk. Diversifying investments further or regularly reviewing the portfolio can help manage this uncertainty and align with changing market conditions.

Asset classes Info

  • Stocks
    100%

The portfolio is almost entirely composed of stocks, with negligible allocations to other asset classes. This high concentration in equities can lead to significant growth potential but also increases exposure to market volatility. A more balanced allocation across asset classes, such as bonds or commodities, could help mitigate risk and provide more stability during market downturns. Diversifying asset classes can also offer opportunities for returns in different economic scenarios, enhancing the portfolio's resilience.

Sectors Info

  • Technology
    32%
  • Financials
    14%
  • Health Care
    11%
  • Consumer Discretionary
    11%
  • Telecommunications
    9%
  • Industrials
    7%
  • Consumer Staples
    6%
  • Real Estate
    3%
  • Energy
    3%
  • Basic Materials
    2%
  • Utilities
    2%

The portfolio is heavily concentrated in the technology sector, accounting for over 32% of the allocation, followed by financial services and healthcare. This sectoral concentration can lead to higher volatility, as performance heavily depends on the tech industry's outlook. While tech has driven significant gains recently, it's important to consider the risks of overexposure to a single sector. Balancing the portfolio with exposure to other sectors, such as utilities or consumer staples, can provide more consistent performance across economic cycles.

Regions Info

  • North America
    91%
  • Europe Developed
    4%
  • Japan
    1%
  • Asia Emerging
    1%
  • Asia Developed
    1%

With over 91% exposure to North American markets, this portfolio is highly concentrated geographically. While this reflects the strong performance of US equities, it also exposes the portfolio to regional risks, such as economic downturns or policy changes in the US. Expanding geographic exposure to emerging markets or other developed regions can enhance diversification and reduce reliance on a single economic area. This approach can also capture growth opportunities in different parts of the world.

Redundant positions Info

  • Vanguard ESG Global All Cap UCITS ETF (USD) Accumulating
    Vanguard S&P 500 UCITS Acc
    High correlation

The assets in this portfolio are highly correlated, meaning they tend to move in the same direction in response to market events. While this can amplify gains during positive market trends, it also increases the risk during downturns, as the entire portfolio may decline simultaneously. To reduce correlation and enhance diversification, consider adding assets with different risk profiles or market behaviors. This approach can help smooth out returns and reduce overall portfolio 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.

The portfolio could benefit from optimization using the Efficient Frontier, which seeks the best risk-return balance by adjusting asset allocations. However, the high correlation between the assets suggests limited diversification benefits. Before optimizing, consider reducing overlap by incorporating uncorrelated assets. This can help achieve a more efficient portfolio that maximizes returns for a given level of risk. Optimization should focus on adjusting allocations within the current asset pool to improve the risk-return ratio.

Ongoing product costs Info

  • Vanguard ESG Global All Cap UCITS ETF (USD) Accumulating 0.24%
  • Vanguard S&P 500 UCITS Acc 0.07%
  • Weighted costs total (per year) 0.11%

The portfolio's total expense ratio (TER) is 0.11%, reflecting low-cost investments in Vanguard ETFs. Minimizing costs is crucial for maximizing long-term returns, as fees can significantly erode gains over time. The chosen ETFs offer a cost-effective way to gain broad market exposure. Regularly reviewing and comparing fund fees ensures the portfolio remains cost-efficient. Consider exploring other low-cost options or direct investments to further reduce expenses while maintaining diversification.

What next?

Create your own report?

Analyze your portfolio

Join our community!

Join Discord

The information provided on this platform is for informational purposes only and should not be considered as financial or investment advice. Insightfolio does not provide investment advice, personalized recommendations, or guidance regarding the purchase, holding, or sale of financial assets. The tools and content are intended for educational purposes only and are not tailored to individual circumstances, financial needs, or objectives.

Insightfolio assumes no liability for the accuracy, completeness, or reliability of the information presented. Users are solely responsible for verifying the information and making independent decisions based on their own research and careful consideration. Use of the platform should not replace consultation with qualified financial professionals.

Investments involve risks. Users should be aware that the value of investments may fluctuate and that past performance is not an indicator of future results. Investment decisions should be based on personal financial goals, risk tolerance, and independent evaluation of relevant information.

Insightfolio does not endorse or guarantee the suitability of any particular financial product, security, or strategy. Any projections, forecasts, or hypothetical scenarios presented on the platform are for illustrative purposes only and are not guarantees of future outcomes.

By accessing the services, information, or content offered by Insightfolio, users acknowledge and agree to these terms of the disclaimer. If you do not agree to these terms, please do not use our platform.

Instrument logos provided by Elbstream.

Help us improve Insightfolio

Your feedback makes a difference! Share your thoughts in our quick survey. Take the survey