A well-diversified global equity portfolio with moderate risk and strong historical performance

Report created on Dec 22, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

This portfolio is comprised entirely of the iShares MSCI ACWI ETF, which offers broad exposure to global equities. With 100% allocation to a single ETF, the portfolio is simple yet effective in achieving diversification across various markets. This composition aligns with a balanced portfolio strategy, providing a mix of growth and stability. However, relying solely on one ETF may limit flexibility in adjusting to market changes. Consider diversifying further with complementary asset classes or funds to enhance adaptability and manage risk more effectively.

Growth Info

Historically, the portfolio has shown strong performance with a Compound Annual Growth Rate (CAGR) of 10.33%. This indicates a robust growth trajectory, outperforming many traditional savings accounts and bonds. The maximum drawdown of -33.53% highlights potential volatility, which is common in equity-focused portfolios. It's important to remember that past performance does not guarantee future results. Regularly reviewing performance against personal financial goals can help in making timely adjustments to maintain the desired risk-return balance.

Projection Info

Monte Carlo simulations project future outcomes by using historical data to simulate a range of potential scenarios. For this portfolio, simulations suggest a 50th percentile outcome of 246.32% growth, indicating a favorable median projection. However, the 5th percentile shows a potential downside of 21.6%, reflecting inherent market risks. While these projections offer insights, they are not predictions. Regularly reassessing risk tolerance and ensuring the portfolio aligns with long-term objectives is crucial for navigating future uncertainties.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted in stocks, with 99.54% allocated to equities. This high concentration in a single asset class can offer significant growth potential but also increases exposure to market volatility. Compared to a typical balanced portfolio, which might include bonds or alternative investments, this allocation leans heavily towards higher risk and return. Introducing other asset classes could provide diversification benefits and reduce overall portfolio volatility, aligning with a more conservative investment approach if desired.

Sectors Info

  • Technology
    27%
  • Financials
    16%
  • Consumer Discretionary
    11%
  • Health Care
    10%
  • Industrials
    10%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    3%
  • Utilities
    3%
  • Real Estate
    2%

Sector allocation within the iShares MSCI ACWI ETF is diverse, with a notable concentration in Technology at 26.95%. This tech-heavy focus can drive growth but may also lead to increased volatility, especially during periods of interest rate hikes. Financial Services and Consumer Cyclicals also hold significant weights, providing a balance between growth and cyclical exposure. Regularly reviewing sector weights and considering adjustments can help ensure alignment with market trends and personal risk tolerance.

Regions Info

  • North America
    69%
  • Europe Developed
    14%
  • Asia Emerging
    5%
  • Japan
    5%
  • Asia Developed
    4%
  • Australasia
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%

The portfolio's geographic exposure is predominantly in North America, accounting for 69.27% of the allocation. This substantial focus on a single region may limit diversification benefits. While North America has been a strong performer, exposure to other regions like Europe and Asia could enhance diversification and reduce region-specific risks. Evaluating geographic allocation regularly can help maintain a balanced approach that aligns with global economic trends and personal investment goals.

Dividends Info

  • iShares MSCI ACWI ETF 0.80%
  • Weighted yield (per year) 0.80%

The portfolio's dividend yield is 0.8%, which is modest compared to some income-focused investments. Dividends can provide a steady income stream and contribute to total returns, particularly in volatile markets. For investors seeking income, exploring additional dividend-paying assets or funds could enhance yield without significantly altering risk exposure. Balancing growth and income is crucial for achieving long-term financial goals.

Ongoing product costs Info

  • iShares MSCI ACWI ETF 0.32%
  • Weighted costs total (per year) 0.32%

The total expense ratio for the iShares MSCI ACWI ETF is 0.32%, which is relatively low. Keeping costs low is beneficial for long-term returns, as high fees can erode gains over time. This cost efficiency aligns well with best practices for portfolio management. Regularly reviewing and comparing fees across similar investment options can ensure that cost-effectiveness is maintained, contributing positively to overall portfolio performance.

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