A balanced globally diversified portfolio with a focus on sustainable and dividend-paying ETFs

Report created on Feb 5, 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 consists of five ETFs, each holding a 10% to 25% weight. This equal-weighted approach among major holdings ensures a balanced exposure across different strategies, such as sustainability and dividends. Compared to a typical balanced benchmark, this portfolio leans towards equities with no fixed income exposure, which may increase volatility. Maintaining this structure can be beneficial for those seeking equity growth, but adding fixed income could enhance stability. Consider diversifying further by including other asset classes to mitigate potential risks associated with an all-equity allocation.

Growth Info

Historically, the portfolio achieved a strong Compound Annual Growth Rate (CAGR) of 12.71%, indicating robust past performance. However, it experienced a significant maximum drawdown of -33.91%, reflecting vulnerability during market downturns. Comparing this to a typical balanced benchmark, the performance is commendable, yet the drawdown highlights potential volatility. While past performance is not a guarantee of future results, it suggests the portfolio's growth potential. To mitigate drawdowns, consider strategies such as adding defensive assets or rebalancing periodically to maintain desired risk levels.

Projection Info

The Monte Carlo simulation, using historical data, projects a median return of 376.8% with a 50th percentile outcome. This method estimates potential future outcomes, though it's important to note its limitations as it relies on past data and assumptions. While the portfolio's projected returns are promising, with 989 out of 1,000 simulations showing positive outcomes, there's still inherent uncertainty. Consider using these projections as a guide rather than a certainty. Regularly review and adjust the portfolio to align with changing market conditions and personal goals.

Asset classes Info

  • Stocks
    99%

The portfolio is heavily skewed towards equities, with 99% in stocks and negligible cash or other asset classes. This concentration aligns with growth-oriented strategies but may lack diversification benefits typically offered by bonds or alternative assets. Compared to a balanced benchmark, the absence of fixed income could increase exposure to market volatility. To enhance diversification, consider incorporating bonds or other asset classes, which can provide stability and income during market fluctuations. This adjustment could improve the portfolio's risk-return profile.

Sectors Info

  • Financials
    28%
  • Technology
    16%
  • Health Care
    12%
  • Industrials
    9%
  • Consumer Discretionary
    9%
  • Telecommunications
    8%
  • Energy
    5%
  • Basic Materials
    4%
  • Consumer Staples
    4%
  • Utilities
    3%
  • Real Estate
    2%

The portfolio's sector allocation is notably concentrated, with financial services and technology comprising 44% of the total weight. While this aligns with common benchmarks, it may expose the portfolio to sector-specific risks, such as interest rate changes or tech volatility. A diversified sector approach helps mitigate these risks by spreading exposure across various industries. Consider reviewing sector allocations periodically to ensure they align with market trends and personal risk tolerance. Balancing exposure across sectors can enhance resilience against sector-specific downturns.

Regions Info

  • Europe Developed
    36%
  • North America
    35%
  • Asia Emerging
    10%
  • Japan
    6%
  • Asia Developed
    6%
  • Australasia
    3%
  • Africa/Middle East
    2%
  • Latin America
    1%
  • Europe Emerging
    1%

Geographically, the portfolio is well-diversified with significant allocations in Europe (36%) and North America (35%), complemented by exposure to emerging markets and other regions. This allocation aligns closely with global benchmarks, offering a balanced approach to regional diversification. However, the relatively low exposure to emerging markets may limit growth potential. Consider increasing exposure to emerging markets to capture opportunities in rapidly growing economies. Regularly assess geographic allocations to ensure they reflect global economic shifts and personal investment goals.

Market capitalization Info

  • Large-cap
    48%
  • Mega-cap
    44%
  • Mid-cap
    7%

The portfolio is predominantly invested in large-cap stocks, with 92% in big and mega-cap companies. This focus on larger companies provides stability and reduced volatility compared to smaller-cap stocks, which can be more volatile but offer higher growth potential. While this aligns with many benchmarks, it may limit exposure to smaller companies that could enhance returns. Consider diversifying across different market capitalizations to capture growth opportunities while maintaining stability. This approach can improve the portfolio's overall risk-return balance.

Redundant positions Info

  • VanEck Sustainable World Equal Weight UCITS ETF
    Vanguard FTSE All-World UCITS ETF
    High correlation

The portfolio contains highly correlated ETFs, particularly between the VanEck Sustainable World Equal Weight and Vanguard FTSE All-World ETFs. High correlation indicates that these assets tend to move in tandem, which can limit diversification benefits during market downturns. While correlation doesn't inherently imply risk, it suggests potential overlap in holdings. To enhance diversification, consider reviewing and potentially adjusting allocations to reduce redundancy and increase exposure to less correlated assets. This adjustment can improve risk management and portfolio resilience.

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 be optimized by addressing the overlap of highly correlated assets, potentially enhancing returns without increasing risk. The Efficient Frontier suggests that a more efficient portfolio could achieve an expected return of 14.24% at the same risk level. This optimization focuses on reallocating current assets rather than diversifying further. Consider reviewing the portfolio's asset allocation to identify opportunities for improvement. Balancing risk and return through optimization can enhance overall performance, but ensure it aligns with personal investment objectives.

Dividends Info

  • VanEck Morningstar Developed Markets Dividend Leaders UCITS ETF 2.40%
  • Vanguard FTSE All-World UCITS ETF 0.90%
  • Weighted yield (per year) 0.82%

The portfolio has a modest total dividend yield of 0.82%, primarily driven by the VanEck Morningstar Developed Markets Dividend Leaders ETF. Dividends provide a steady income stream, which can be particularly appealing during market volatility. While the yield is lower than some income-focused portfolios, it complements the growth-oriented strategy. Consider whether dividend income aligns with personal investment goals. If income generation is a priority, explore opportunities to increase dividend exposure. Otherwise, focus on growth and capital appreciation.

Ongoing product costs Info

  • VanEck Sustainable World Equal Weight UCITS ETF 0.20%
  • VanEck Sustainable European Equal Weight UCITS ETF 0.20%
  • VanEck Morningstar Developed Markets Dividend Leaders UCITS ETF 0.38%
  • Vanguard FTSE Emerging Markets UCITS 0.22%
  • Vanguard FTSE All-World UCITS ETF 0.22%
  • Weighted costs total (per year) 0.25%

The portfolio's total expense ratio (TER) is 0.25%, which is relatively low and supports better long-term performance by minimizing costs. Low fees are crucial as they directly impact net returns over time. Compared to industry averages, this cost structure is favorable and aligns with best practices for cost efficiency. Maintaining low costs is a positive aspect of the portfolio. Regularly review expense ratios to ensure they remain competitive. Consider reallocating to lower-cost options if available, while maintaining alignment with investment goals.

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