Balanced Portfolio with Moderate Diversification and Strong Technology Focus

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

What type of investor this portfolio is suitable for

Balanced Investors

This portfolio is suitable for investors who are moderately risk-tolerant and seek balanced growth. They are likely interested in long-term capital appreciation rather than immediate income. These investors prefer a diversified approach but are comfortable with significant exposure to equities, particularly in developed markets. Their investment horizon is likely medium to long-term, allowing them to weather short-term volatility. Such investors are typically willing to accept some market risk for the potential of higher returns, focusing on strategic growth opportunities.

Positions

  • Invesco EQQQ NASDAQ-100 UCITS ETF Acc
    EQQB - IE00BFZXGZ54
    60.00%
  • Amundi Stoxx Europe 600 UCITS ETF C EUR
    LYP6 - LU0908500753
    30.00%
  • Xtrackers Nikkei 225 UCITS ETF 1C EUR
    XNKY - LU2196470426
    10.00%

The portfolio consists of three main positions: Invesco EQQQ NASDAQ-100 UCITS ETF, Amundi Stoxx Europe 600 UCITS ETF, and Xtrackers Nikkei 225 UCITS ETF. The largest allocation is to the NASDAQ-100, making up 60% of the portfolio, followed by 30% in the European market and 10% in the Japanese market. This composition shows a strong focus on technology and developed markets, with a balanced risk classification. It's moderately diversified, primarily within equities, which can provide growth potential but also introduces market volatility.

Growth

Historically, the portfolio has shown a solid performance with a compound annual growth rate (CAGR) of 13.14%. The maximum drawdown experienced was -18.7%, indicating the level of risk during market downturns. The returns are concentrated over a small number of days, suggesting that timing can significantly affect performance. This performance history highlights the potential for substantial growth but also underscores the importance of being prepared for periods of volatility.

Projection

Using a Monte Carlo simulation with 1,000 iterations, the portfolio's future performance was projected. This simulation models potential future returns based on historical data, providing a range of possible outcomes. The median outcome suggests a significant growth potential with a 50th percentile return of 301.8%. However, there's also a wide range of outcomes, with the 5th percentile at 39.83% and the 67th percentile at 432.3%. This indicates both opportunities for high returns and risks of lower performance, emphasizing the importance of risk management.

Asset classes

  • Stocks
    100%
  • Other
    0%
  • Cash
    0%

The portfolio is heavily weighted towards equities, with 99.87% in stocks. This high allocation to stocks aligns with a growth-focused strategy but also introduces significant market risk. The minimal presence of other asset classes and cash suggests limited diversification across different types of investments. To manage risk, it's often beneficial to include a broader range of asset classes, such as bonds, which can provide stability and income in volatile markets.

Sectors

  • Technology
    35%
  • Consumer Discretionary
    13%
  • Telecommunications
    12%
  • Industrials
    9%
  • Health Care
    9%
  • Consumer Staples
    7%
  • Financials
    7%
  • Basic Materials
    3%
  • Energy
    2%
  • Utilities
    2%
  • Real Estate
    1%

The sector allocation shows a strong emphasis on technology, which constitutes 35.39% of the portfolio. Other significant sectors include consumer cyclicals, communication services, and industrials. While this sector concentration can lead to high returns during tech booms, it also increases exposure to sector-specific risks. A more balanced sector allocation can help mitigate these risks and provide more consistent returns across different market conditions.

Regions

  • North America
    59%
  • Europe Developed
    30%
  • Japan
    10%
  • Latin America
    0%
  • Asia Emerging
    0%
  • Europe Emerging
    0%

Geographically, the portfolio is concentrated in North America, with nearly 59% of assets, followed by Europe and Japan. This allocation reflects a focus on developed markets, which can offer stability and growth. However, emerging markets are underrepresented, which might limit exposure to higher growth opportunities. A more geographically diversified portfolio can benefit from the growth potential of emerging economies, helping to balance risk and return.

Dividends

The portfolio does not emphasize dividend yield, focusing instead on growth through capital appreciation. While dividends can provide a steady income stream and reduce overall portfolio volatility, this portfolio's strategy is more oriented towards long-term growth. Investors seeking regular income might consider integrating dividend-paying stocks or funds to balance growth with income.

Ongoing product costs

  • Invesco EQQQ NASDAQ-100 UCITS ETF Acc 0.35%
  • Amundi Stoxx Europe 600 UCITS ETF C EUR 0.07%
  • Xtrackers Nikkei 225 UCITS ETF 1C EUR 0.09%
  • Weighted costs total (per year) 0.24%

The portfolio's total expense ratio (TER) is 0.24%, which is relatively low and cost-effective. Keeping investment costs low is crucial as it directly impacts net returns. The individual expense ratios of the ETFs are competitive, indicating efficient management. However, regular reviews of these costs can ensure they remain aligned with performance expectations. Lower costs can lead to higher net returns over time, enhancing overall portfolio efficiency.

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