A conservative and diversified portfolio with low risk and moderate return potential

Report created on Dec 26, 2024

Risk profile Info

2/7
Conservative
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification

Positions

The portfolio is composed primarily of ETFs, with a significant allocation towards stocks at 62.6%, followed by bonds at 34%, and a small cash position. This composition aligns with a conservative risk profile, balancing growth potential with stability. Compared to typical conservative portfolios, this one is slightly more aggressive due to its higher equity exposure. To ensure the portfolio remains well-aligned with your risk tolerance, consider periodically reviewing the asset allocation and rebalancing as needed to maintain the desired risk level.

Growth Info

Historically, the portfolio has delivered a compound annual growth rate (CAGR) of 6.3%, with a maximum drawdown of -11.28%. This performance suggests a stable growth trajectory with manageable downside risk, typical for a conservative portfolio. When compared to similar risk profiles, this performance is commendable. However, keep in mind that past performance is not indicative of future results. Regularly reviewing performance against benchmarks can provide insights into any necessary adjustments to maintain alignment with your goals.

Projection Info

Monte Carlo simulations project potential future outcomes by analyzing historical data. For this portfolio, simulations suggest a 5.8% annualized return, with a 5th percentile outcome of -4.42% and a 67th percentile of 152.19%. These projections indicate a high probability of positive returns, aligning with the conservative risk profile. Remember that simulations are based on historical data and assumptions, which may not fully capture future market conditions. Regularly updating projections with new data can help maintain realistic expectations.

Asset classes Info

  • Stocks
    63%
  • Bonds
    34%
  • Cash
    3%

The portfolio's allocation across asset classes includes a notable 62.6% in stocks and 34% in bonds, with minimal cash holdings. This distribution provides a balanced approach to growth and income, with stocks offering potential capital appreciation and bonds providing stability and income. Compared to benchmarks for conservative portfolios, this allocation is slightly more equity-focused, which may enhance returns but also increase risk. Consider periodically reviewing the balance to ensure it remains in line with your risk tolerance.

Sectors Info

  • Financials
    10%
  • Industrials
    9%
  • Technology
    8%
  • Real Estate
    7%
  • Consumer Discretionary
    6%
  • Health Care
    5%
  • Consumer Staples
    4%
  • Basic Materials
    4%
  • Telecommunications
    4%
  • Utilities
    3%
  • Energy
    3%

Sector allocation is diverse, with financial services, industrials, and technology being the top three sectors. This diversification helps mitigate sector-specific risks and aligns closely with global benchmarks. However, the technology sector's 7.6% allocation may introduce some volatility, especially during interest rate changes. Maintaining a balanced sector exposure is crucial for risk management. Regularly reviewing sector trends and adjusting allocations can help optimize the portfolio for changing market conditions.

Regions Info

  • North America
    25%
  • Europe Developed
    19%
  • Asia Emerging
    7%
  • Asia Developed
    5%
  • Japan
    3%
  • Africa/Middle East
    2%
  • Latin America
    1%
  • Australasia
    1%

Geographically, the portfolio is well-diversified, with significant exposure to North America and Europe. This allocation aligns with global market benchmarks and provides a stable foundation for growth. The underrepresentation in emerging markets, at 7.2%, suggests a conservative stance towards higher-risk regions. While this reduces volatility, it may limit potential growth. Consider assessing whether additional exposure to emerging markets aligns with your risk tolerance and long-term goals.

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 risk-return profile can be optimized using the Efficient Frontier, which identifies the best possible risk-return ratio for a given set of assets. This optimization focuses solely on reallocating existing assets to achieve better efficiency. While the portfolio is already well-diversified, exploring potential rebalancing strategies using the Efficient Frontier can further enhance performance. Remember, efficiency refers to maximizing returns for a given level of risk, not necessarily diversification.

Dividends Info

  • VanEck Vectors ETFs N.V. - VanEck Vectors Global Real Estate UCITS ETF 3.40%
  • Weighted yield (per year) 0.12%

The dividend yield of the portfolio is relatively low at 0.12%, with the VanEck Global Real Estate ETF contributing the highest yield of 3.4%. For conservative investors, dividends can be a stable source of income. However, the low overall yield suggests a focus on capital appreciation rather than income generation. If income is a priority, consider increasing exposure to higher-yielding assets while maintaining diversification and risk management.

Ongoing product costs Info

  • iShares $ Treasury Bond 1-3yr UCITS ETF EUR Hedged (Acc) 0.10%
  • iShares Edge MSCIope Quality Factor UCITS 0.25%
  • iShares Edge MSCI Europe Momentum Factor UCITS ETF EUR (Acc) 0.25%
  • iShares Euro Ultrashort Bond UCITS 0.09%
  • iShares Core MSCI Emerging Markets IMI UCITS 0.18%
  • iShares MSCI World Small Cap UCITS ETF USD (Acc) 0.35%
  • JPM Global Equity Multi-Factor UCITS ETF USD Acc 0.19%
  • Lyxor UCITS EuroMTS Highest Rated Macro-Weighted Govt Bond 1-3Y DR 0.16%
  • VanEck Vectors ETFs N.V. - VanEck Vectors Global Real Estate UCITS ETF 0.25%
  • SPDR® MSCI Europe Small Cap Value Weighted UCITS ETF EUR Acc 0.30%
  • Weighted costs total (per year) 0.18%

The total expense ratio (TER) of the portfolio is 0.18%, which is impressively low and supports better long-term performance by minimizing costs. This cost efficiency aligns well with the conservative investment strategy, ensuring that more of your returns are retained. Regularly reviewing the cost structure and exploring opportunities to reduce fees further can enhance net returns without significantly altering the portfolio's risk profile.

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