Conservative Portfolio with Moderate Diversification and Efficient Frontier Positioning

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

Conservative Investors

This portfolio suits conservative investors who prioritize stability and modest growth over aggressive returns. Typically, these investors have a low risk tolerance and prefer a diversified approach to mitigate potential losses. Their investment horizon is often medium to long-term, focusing on preserving capital while seeking steady appreciation. Such investors value a balanced mix of bonds, equities, and other assets to achieve their financial goals. They are likely to prefer investments that offer consistent performance with limited volatility, ensuring peace of mind in uncertain market conditions.

Positions

  • Xtrackers II Eurozone Government Bond UCITS ETF 1C EUR
    DBXN - LU0290355717
    55.00%
  • Vanguard FTSE All-World UCITS ETF USD Accumulation
    VWCE - IE00BK5BQT80
    30.00%
  • Invesco Physical Gold ETC EUR
    8PSG - IE00B579F325
    7.50%
  • iShares Diversified Commodity Swap UCITS ETF
    SXRS - IE00BDFL4P12
    7.50%

The portfolio consists of four main positions: Xtrackers II Eurozone Government Bond UCITS ETF, Vanguard FTSE All-World UCITS ETF, Invesco Physical Gold ETC, and iShares Diversified Commodity Swap UCITS ETF. This composition leans heavily towards bonds, with 55% allocated to a Eurozone government bond ETF. The rest is diversified into global equities, gold, and commodities. A mix like this suggests a conservative approach, with a focus on stability and modest growth. A well-rounded portfolio like this can help balance risk and reward, but consider if the current allocation aligns with your long-term goals.

Growth

Historically, the portfolio has shown a compound annual growth rate (CAGR) of 4.63%, with a maximum drawdown of -14.89%. This indicates that while the portfolio has grown over time, it has also experienced some volatility. Understanding the historical performance helps in setting realistic expectations for future returns. While a 4.63% CAGR is decent for a conservative portfolio, analyzing periods of drawdown is crucial to ensure comfort with potential losses. Consider whether the historical performance aligns with your risk tolerance and future goals to determine if adjustments are necessary.

Projection

Using a Monte Carlo simulation, which projects potential future performance based on historical data, the portfolio shows promising results. Assuming a hypothetical initial investment, the simulation indicates a 50th percentile end value of 209.63%, with an annualized return of 8.99%. This suggests that the portfolio could yield positive returns in most scenarios. Monte Carlo simulations are useful for understanding potential outcomes and risks. While the projections are optimistic, it's essential to remember that past performance doesn't guarantee future results. Regularly reviewing projections can help ensure your investment strategy remains aligned with your goals.

Asset classes

  • Bonds
    55%
  • Stocks
    30%
  • Other
    7%
  • Cash
    0%
  • No data
    0%

The portfolio is primarily composed of bonds at 54.97%, followed by stocks at 29.98%, with the remainder in commodities and gold. This allocation reflects a conservative investment strategy, prioritizing stability over aggressive growth. Diversifying across asset classes can help mitigate risks associated with market fluctuations. While bonds provide stability, equities offer growth potential, and commodities add a hedge against inflation. Ensuring a balance between these asset classes is crucial for maintaining a risk profile that aligns with your investment objectives. Reassessing your allocation periodically ensures it remains suitable for your changing needs.

Sectors

  • Technology
    8%
  • Financials
    5%
  • Health Care
    3%
  • Consumer Discretionary
    3%
  • Industrials
    3%
  • Telecommunications
    2%
  • Consumer Staples
    2%
  • Energy
    1%
  • Basic Materials
    1%
  • Utilities
    1%
  • Real Estate
    1%

The sector allocation is diverse, with technology, financial services, and healthcare making up the largest portions. This diversification across sectors provides a buffer against sector-specific downturns, contributing to a more stable portfolio. Sector allocation is important as different sectors perform differently in various economic conditions. A well-diversified sector allocation can help capture growth opportunities while minimizing risks. Regularly reviewing sector exposure and adjusting based on market conditions and personal preferences can enhance portfolio performance. Consider if the current sector allocation aligns with your risk tolerance and investment goals.

Regions

  • North America
    19%
  • Europe Developed
    5%
  • Asia Emerging
    2%
  • Japan
    2%
  • Asia Developed
    1%
  • Australasia
    1%
  • Africa/Middle East
    0%
  • Latin America
    0%
  • Europe Emerging
    0%

Geographically, the portfolio is most heavily invested in North America, with smaller allocations in Europe, Asia, and other regions. This geographic spread provides exposure to different economic environments and growth opportunities. Geographic diversification is crucial as it reduces the risk associated with economic or political instability in a single region. While North America offers strong growth potential, exposure to other regions can provide balance and additional opportunities. Assessing geographic exposure regularly helps ensure that your portfolio aligns with your risk appetite and global economic outlook. Consider if the current geographic allocation meets your diversification needs.

Ongoing product costs

  • Invesco Physical Gold ETC EUR 0.12%
  • Xtrackers II Eurozone Government Bond UCITS ETF 1C EUR 0.10%
  • iShares Diversified Commodity Swap UCITS ETF 0.19%
  • Vanguard FTSE All-World UCITS ETF USD Accumulation 0.22%
  • Weighted costs total (per year) 0.14%

The portfolio's total expense ratio (TER) is 0.14%, which is relatively low and beneficial for long-term investors. Keeping investment costs low is crucial for maximizing returns, as high fees can erode gains over time. A low TER indicates efficient cost management, allowing more of your investment to compound over the years. Regularly reviewing and comparing costs across similar investment options can ensure that you're getting the most value. Consider if the current cost structure aligns with your investment strategy and if there are opportunities to further reduce expenses.

Risk vs. return

This chart displays the Efficient Frontier, showing the best balance between risk and return for your portfolio based on historical data. It calculates the most efficient asset allocations. If your portfolio is below the curve, it can be optimized for higher returns or lower risk. Portfolios on the curve are the most efficient.

The current portfolio is close to the efficient frontier, indicating an efficient balance between risk and return. The efficient frontier represents the optimal portfolio mix offering the highest expected return for a given level of risk. While the portfolio is efficient, exploring different risk levels can uncover potentially higher returns. The optimal portfolio identified has a higher expected return, but also a higher risk level. Regularly reviewing and adjusting the portfolio can ensure it remains aligned with your evolving risk preferences and financial goals, maintaining its efficiency over time.

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