A balanced portfolio with a strong focus on US equities and technology exposure

Report created on Dec 19, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio is composed of five ETFs, with a significant 40.98% allocation to the Vanguard S&P 500 ETF, indicating a strong focus on large-cap U.S. equities. The iShares MSCI World ETF, at 22.44%, adds international exposure, while the Vanguard Information Technology Index Fund ETF Shares, at 15.61%, emphasizes the technology sector. The iShares US Small Cap Value Factor ETF and iShares Global Healthcare ETF provide diversification in small caps and healthcare. This composition suggests a moderately diversified portfolio with a tilt towards growth and technology. To enhance diversification, consider balancing allocations more evenly across sectors and regions.

Growth Info

The portfolio has demonstrated a strong historical performance with a Compound Annual Growth Rate (CAGR) of 16.19%, which is impressive compared to typical market benchmarks. However, it also experienced a maximum drawdown of 24.63%, indicating significant volatility during market downturns. This performance suggests that while the portfolio has been successful in generating returns, it carries a level of risk that may not suit all investors. To mitigate potential drawdowns, consider incorporating more defensive assets or adjusting allocations to reduce volatility.

Projection Info

Forward projections using Monte Carlo simulations show a wide range of potential outcomes. The 50th percentile projects a 623.75% return, while the 5th percentile shows a 116.2% return, highlighting the uncertainty inherent in future market conditions. Monte Carlo simulations use historical data to model potential future returns, but it's important to remember that past performance doesn't guarantee future results. To manage expectations, consider setting realistic return targets and regularly reviewing the portfolio to ensure it aligns with your investment goals.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted towards stocks, comprising 99.75% of the total allocation, with minimal holdings in cash and other asset classes. This concentration in equities can lead to higher potential returns but also exposes the portfolio to increased risk during market downturns. Diversification across different asset classes, such as bonds or real estate, could help mitigate risk and provide more stable returns over time. Consider introducing other assets to achieve a more balanced risk-return profile.

Sectors Info

  • Technology
    35%
  • Health Care
    16%
  • Financials
    15%
  • Consumer Discretionary
    8%
  • Industrials
    7%
  • Telecommunications
    6%
  • Consumer Staples
    4%
  • Energy
    3%
  • Basic Materials
    2%
  • Utilities
    2%
  • Real Estate
    2%

The sector allocation is notably concentrated in technology at 35.33%, followed by healthcare and financial services. This concentration in technology could lead to higher volatility, especially during periods of regulatory changes or interest rate hikes. While the portfolio benefits from exposure to high-growth sectors, it may lack balance across other areas. To reduce sector-specific risks, consider increasing exposure to more stable sectors like consumer defensive or utilities, which can offer resilience during market fluctuations.

Regions Info

  • North America
    92%
  • Europe Developed
    6%
  • Japan
    2%
  • Australasia
    1%

The portfolio's geographic exposure is heavily skewed towards North America, accounting for 91.82% of the allocation. This concentration may limit the benefits of global diversification, as it exposes the portfolio to regional economic and political risks. Increasing exposure to other regions, such as emerging markets or Europe, could enhance diversification and capture growth opportunities in different economic environments. Consider rebalancing geographic allocations to align with global market benchmarks for a more balanced risk profile.

Redundant positions Info

  • Vanguard S&P 500 ETF
    iShares MSCI World ETF
    High correlation

The portfolio contains highly correlated assets, particularly between the Vanguard S&P 500 ETF and the iShares MSCI World ETF. High correlation means these assets tend to move together, which can limit diversification benefits during market downturns. To enhance diversification, consider replacing one of these ETFs with an asset that has a lower correlation with the rest of the portfolio. This can help reduce overall portfolio risk and improve the risk-return balance.

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 can be optimized using the Efficient Frontier, which seeks the best possible risk-return ratio. This process involves adjusting allocations among existing assets to achieve maximum returns for a given level of risk. While diversification is important, the Efficient Frontier focuses solely on optimizing the risk-return balance. To pursue this optimization, consider reallocating funds among the current ETFs to achieve a more efficient portfolio that aligns with your risk tolerance and investment objectives.

Dividends Info

  • iShares Global Healthcare ETF 1.40%
  • iShares US Small Cap Value Factor ETF 2.40%
  • iShares MSCI World ETF 1.40%
  • Vanguard Information Technology Index Fund ETF Shares 0.50%
  • Vanguard S&P 500 ETF 1.30%
  • Weighted yield (per year) 1.34%

The portfolio's dividend yield stands at 1.34%, which is relatively modest. Dividends can provide a steady income stream, especially for investors seeking cash flow or reinvestment opportunities. While the current yield may align with a growth-focused strategy, those seeking higher income might explore increasing allocations to higher-yielding assets. Balancing growth and income can help achieve a more comprehensive investment strategy that supports both capital appreciation and income generation.

Ongoing product costs Info

  • iShares Global Healthcare ETF 0.42%
  • iShares US Small Cap Value Factor ETF 0.20%
  • iShares MSCI World ETF 0.24%
  • Vanguard Information Technology Index Fund ETF Shares 0.10%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.14%

The portfolio's total expense ratio (TER) is 0.14%, which is commendably low. Low costs are crucial for maximizing long-term returns, as high fees can erode investment gains over time. The Vanguard S&P 500 ETF, with a TER of 0.03%, exemplifies cost efficiency. While the iShares Global Healthcare ETF has a higher cost at 0.42%, the overall portfolio remains cost-effective. Continuously monitoring and minimizing expenses can further enhance the portfolio's performance, ensuring more of your returns are retained.

What next?

Ready to invest in this portfolio?

Select a broker that fits your needs and watch for low fees to maximize your returns.

Select broker

Create your own report?

Analyze your portfolio

Join our community!

Join Discord

The information provided on this platform is for informational purposes only and should not be considered as financial or investment advice. Insightfolio does not provide investment advice, personalized recommendations, or guidance regarding the purchase, holding, or sale of financial assets. The tools and content are intended for educational purposes only and are not tailored to individual circumstances, financial needs, or objectives.

Insightfolio assumes no liability for the accuracy, completeness, or reliability of the information presented. Users are solely responsible for verifying the information and making independent decisions based on their own research and careful consideration. Use of the platform should not replace consultation with qualified financial professionals.

Investments involve risks. Users should be aware that the value of investments may fluctuate and that past performance is not an indicator of future results. Investment decisions should be based on personal financial goals, risk tolerance, and independent evaluation of relevant information.

Insightfolio does not endorse or guarantee the suitability of any particular financial product, security, or strategy. Any projections, forecasts, or hypothetical scenarios presented on the platform are for illustrative purposes only and are not guarantees of future outcomes.

By accessing the services, information, or content offered by Insightfolio, users acknowledge and agree to these terms of the disclaimer. If you do not agree to these terms, please do not use our platform.

Instrument logos provided by Elbstream.

Help us improve Insightfolio

Your feedback makes a difference! Share your thoughts in our quick survey. Take the survey