A balanced portfolio with strong North American focus and high-tech sector exposure

Report created on Mar 4, 2025

Risk profile Info

4/7
Balanced
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Diversification profile Info

3/5
Moderately Diversified
← Less diversification More diversification →

Positions

This portfolio consists of two ETFs: Vanguard S&P 500 UCITS Acc (70%) and Vanguard FTSE All-World UCITS ETF USD Accumulation (30%). This composition provides broad exposure to large-cap stocks, primarily from the United States, with a tilt towards global diversification. The portfolio's structure leans heavily on North American equities, which can be beneficial for capturing growth from well-established markets. However, it may also limit exposure to other potentially lucrative regions. Consider balancing the allocation to include more international markets for enhanced diversification and risk mitigation.

Growth Info

Historically, this portfolio has delivered a strong Compound Annual Growth Rate (CAGR) of 14.29%, indicating robust performance over time. This growth rate suggests that the portfolio has consistently outperformed many benchmarks, providing significant returns. However, it experienced a maximum drawdown of -33.59%, highlighting potential volatility during market downturns. While past performance is not indicative of future results, it can offer insights into how the portfolio might behave under similar market conditions. To mitigate future risks, maintaining a diversified allocation across different asset classes and regions is advisable.

Projection Info

Using Monte Carlo simulations, which analyze potential future outcomes based on historical data, this portfolio shows promising projections. With 1,000 simulations, 994 resulted in positive returns, suggesting a high probability of future success. The median projection indicates a potential portfolio value increase of 480.8%, while the 5th percentile shows an 81.4% increase. Although these projections are encouraging, they rely on historical data and assumptions, which may not account for future market changes. Regularly reviewing and adjusting the portfolio to align with evolving market conditions and personal goals is recommended.

Asset classes Info

  • Stocks
    100%

The portfolio is entirely composed of stocks, lacking exposure to other asset classes like bonds or real estate. This singular focus on equities can drive growth but also increases vulnerability to market volatility. Diversification across asset classes can help stabilize returns and reduce risk. Adding fixed-income securities or alternative investments could enhance resilience during economic downturns. While the current allocation aligns with a growth-oriented strategy, incorporating a broader range of assets may better support long-term financial objectives.

Sectors Info

  • Technology
    30%
  • Financials
    15%
  • Consumer Discretionary
    11%
  • Health Care
    10%
  • Telecommunications
    10%
  • Industrials
    8%
  • Consumer Staples
    6%
  • Energy
    3%
  • Utilities
    3%
  • Basic Materials
    2%
  • Real Estate
    2%

The portfolio is heavily weighted towards the technology sector, accounting for 30% of its composition. While tech stocks have delivered strong returns, they can also be susceptible to rapid changes in market sentiment and regulatory challenges. Other sectors, such as financial services and consumer cyclicals, provide additional diversification but in smaller proportions. Balancing sector exposure can help mitigate risks associated with sector-specific downturns. Consider adjusting the allocation to include more defensive sectors, such as healthcare or utilities, to achieve a more stable risk-return profile.

Regions Info

  • North America
    90%
  • Europe Developed
    5%
  • Japan
    2%
  • Asia Emerging
    2%
  • Asia Developed
    1%
  • Australasia
    1%

Geographically, the portfolio is concentrated in North America, with 90% exposure, leaving minimal allocation to other regions. While North American markets have historically been strong performers, this concentration can limit diversification benefits and expose the portfolio to regional risks. Expanding geographic exposure to include more developed and emerging markets could enhance diversification and capture growth opportunities worldwide. Balancing regional allocations can reduce reliance on any single market and improve the portfolio's resilience against localized economic downturns.

Market capitalization Info

  • Mega-cap
    47%
  • Large-cap
    35%
  • Mid-cap
    18%
  • Small-cap
    1%

The portfolio's market capitalization is predominantly in mega and large-cap stocks, with 47% in mega caps and 35% in large caps. This focus on well-established companies can provide stability and consistent returns. However, it may also limit exposure to high-growth opportunities often found in mid and small-cap stocks. Including a broader range of market capitalizations can enhance diversification and potentially increase returns. Consider integrating more mid and small-cap stocks to tap into growth potential while maintaining a balanced risk profile.

Redundant positions Info

  • Vanguard S&P 500 UCITS Acc
    Vanguard FTSE All-World UCITS ETF USD Accumulation
    High correlation

The portfolio's assets are highly correlated, as both ETFs primarily track large-cap stocks with significant overlap. High correlation can reduce diversification benefits, especially during market downturns when asset prices tend to move together. To enhance diversification, consider incorporating assets with lower correlation, such as bonds or alternative investments. This approach can help cushion the portfolio from market volatility and improve its overall risk-return balance. Regularly reviewing asset correlations and adjusting allocations accordingly is crucial for effective risk management.

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 could benefit from optimization using the Efficient Frontier, a concept that identifies the best possible risk-return ratio for a given set of assets. However, the high correlation between the existing ETFs limits diversification benefits. Before optimizing, consider reducing overlap by introducing assets with lower correlation, which can enhance diversification and improve the portfolio's efficiency. This approach can help achieve a more balanced risk-return profile, aligning with long-term investment goals.

Ongoing product costs Info

  • Vanguard S&P 500 UCITS Acc 0.07%
  • Vanguard FTSE All-World UCITS ETF USD Accumulation 0.22%
  • Weighted costs total (per year) 0.12%

The portfolio boasts impressively low costs, with a Total Expense Ratio (TER) of just 0.12%. Low costs are crucial for enhancing long-term returns, as high fees can erode gains over time. This cost efficiency aligns well with best practices and supports the portfolio's growth potential. Maintaining a focus on cost-effective investments ensures that more of the portfolio's returns are retained. Regularly reviewing and comparing costs across potential investments can help sustain this advantage and optimize overall performance.

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