Balanced Portfolio with Strong Tech Focus and Moderate Diversification

Report created on Jun 14, 2024

Risk profile Info

4/7
Balanced
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Diversification profile Info

3/5
Moderately Diversified
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Positions

The portfolio is composed of three ETFs, with a significant focus on the Invesco EQQQ NASDAQ-100, which makes up 60% of the allocation. This heavy weighting in a single ETF suggests a strong tilt towards technology stocks. The remaining 40% is split between the Amundi Stoxx Europe 600 and the Xtrackers Nikkei 225, providing exposure to European and Japanese markets. This composition indicates a moderately diversified portfolio primarily focused on equities. While the current diversification provides some global reach, the heavy concentration in technology could expose the portfolio to sector-specific risks.

Growth Info

Historically, the portfolio has shown impressive performance with a CAGR of 14.36%. This indicates strong growth over time, albeit with a maximum drawdown of -18.7%, which suggests vulnerability to market downturns. The fact that 90% of returns were realized in just 14 days highlights the portfolio's reliance on a few key performance periods. This performance pattern underscores the importance of staying invested to capture these high-return days. Maintaining a long-term investment horizon could help in weathering the volatility and benefiting from the growth potential.

Projection Info

Using a Monte Carlo simulation with 1,000 iterations, the portfolio's future performance was projected. This method assesses potential outcomes by simulating various market conditions. With a hypothetical initial investment, the simulation indicates a median return of 323.37% and a 67th percentile return of 475.98%. A notable 989 out of 1,000 simulations resulted in positive returns, with an annualized return of 12.31%. These projections suggest a favorable outlook, but it's essential to remember that past performance doesn't guarantee future results. Diversifying further could help manage risks and potentially improve outcomes.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted towards stocks, with 99.87% of the assets in equities. This high concentration in a single asset class can lead to increased volatility and potential risk, especially during market downturns. Having a broader mix of asset classes, such as bonds or alternative investments, could help reduce risk and provide more stability. While equities offer growth potential, a more balanced allocation could help cushion against market fluctuations and provide a more consistent return profile over time.

Sectors Info

  • 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 portfolio's sector allocation reveals a dominant focus on technology, comprising 35.39% of the investments. Other significant sectors include consumer cyclicals, communication services, and industrials. This heavy tech allocation could lead to increased risk if the tech sector faces downturns. Balancing the sector exposure by incorporating more defensive sectors, such as utilities or consumer staples, could help mitigate this risk. A well-rounded sector allocation can provide resilience against sector-specific volatility and contribute to more stable portfolio performance.

Regions Info

  • North America
    59%
  • Europe Developed
    30%
  • Japan
    10%

Geographically, the portfolio is primarily concentrated in North America, with 58.76% exposure, followed by Europe Developed and Japan. This allocation provides a good mix of developed market exposure but lacks significant presence in emerging markets. While developed markets offer stability, emerging markets can provide growth opportunities. Expanding geographic diversification could help capture growth from different regions and reduce the impact of regional economic downturns. A more globally diversified portfolio can enhance resilience and offer a more balanced risk-return profile.

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 is close to the efficient frontier, indicating a good balance between risk and return. However, it's not the optimal portfolio. The optimal one has a higher expected return of 18.80% with a risk level of 19.98%. To achieve this, consider adjusting the risk level according to personal preferences. The efficient frontier concept helps identify portfolios that offer the highest expected return for a given level of risk. By exploring different allocations, one can potentially enhance returns while managing risk effectively.

Ongoing product costs Info

  • 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 indicates cost-effective management. Low costs are beneficial as they help maximize net returns over time. ETFs typically offer lower expense ratios compared to actively managed funds, making them an attractive option for cost-conscious investors. Maintaining low investment costs is crucial for long-term success, as high fees can erode returns. Continuously monitoring and optimizing costs can help ensure that the portfolio remains efficient and aligned with financial goals.

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