A growth-focused portfolio with strong North American exposure and high technology concentration

Report created on Dec 30, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio consists of three ETFs, each holding a third of the total allocation. This structure ensures simplicity but limits diversification across asset classes. A typical balanced portfolio might include a mix of stocks, bonds, and other assets. While this portfolio is heavily weighted towards equities, it lacks exposure to bonds or alternative investments, which could provide stability during market volatility. For improved balance, consider diversifying into different asset classes to mitigate risk and enhance potential returns.

Growth Info

Historically, the portfolio has performed well with a CAGR of 16.66%, indicating strong growth over time. However, it also experienced a significant max drawdown of -31.88%, highlighting potential volatility. While past performance can provide insights, it's important to remember that it doesn't guarantee future results. Comparing this to a benchmark, the returns are impressive, but the high drawdown suggests a need for risk management strategies. Consider incorporating assets that may offer downside protection to balance growth with risk.

Projection Info

Using Monte Carlo simulations, this portfolio shows a wide range of potential outcomes with an annualized return of 18.12%. Monte Carlo analysis uses historical data to simulate future returns, providing a probabilistic view of potential outcomes. While the median projection is promising, the 5th percentile indicates possible substantial losses. It's crucial to understand that these projections are not predictions and carry inherent uncertainty. Regularly reviewing and adjusting allocations can help manage risks and align with your financial goals.

Asset classes Info

  • Stocks
    100%

The portfolio is almost entirely composed of stocks, which account for 99.85% of the allocation. This heavy concentration in equities can drive growth but also exposes the portfolio to market volatility. A more diversified asset class allocation, including bonds or real estate, could offer a buffer against market swings. Diversifying across asset classes may reduce risk and provide more stable returns over time, especially during market downturns. Consider exploring other asset classes to enhance the portfolio's resilience.

Sectors Info

  • Technology
    37%
  • Consumer Discretionary
    12%
  • Telecommunications
    11%
  • Financials
    10%
  • Health Care
    9%
  • Industrials
    7%
  • Consumer Staples
    6%
  • Energy
    3%
  • Utilities
    2%
  • Basic Materials
    2%
  • Real Estate
    2%

The portfolio has a notable concentration in technology, comprising over 36% of the allocation. While this sector has driven significant growth, it can also lead to higher volatility, especially if interest rates rise. Other sectors, like consumer cyclicals and communication services, also have substantial representation. A more balanced sector allocation can mitigate risks associated with sector-specific downturns. Consider evaluating sector weights and potentially diversifying into underrepresented areas to reduce concentration risk and enhance stability.

Regions Info

  • North America
    91%
  • Europe Developed
    6%
  • Japan
    2%
  • Australasia
    1%

This portfolio is heavily skewed towards North America, with over 91% of assets allocated there. While this region has historically offered strong returns, it also exposes the portfolio to regional risks. Limited exposure to other regions like Europe or Asia can reduce diversification benefits. A more globally diversified portfolio might better weather regional economic downturns. Consider increasing geographic diversification to include emerging markets or other developed regions to enhance the portfolio's resilience against regional volatility.

Redundant positions Info

  • iShares Core MSCI World UCITS ETF USD (Acc)
    Vanguard S&P 500 UCITS Acc
    High correlation

The portfolio contains highly correlated assets, particularly between the iShares Core MSCI World and Vanguard S&P 500 ETFs. High correlation means these assets tend to move together, which can limit diversification benefits. In times of market stress, such assets may not provide the desired risk mitigation. Diversification aims to reduce risk by mixing assets that behave differently. Consider replacing one of these ETFs with a less correlated asset to improve the portfolio's diversification and risk 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 could benefit from optimization using the Efficient Frontier concept, which seeks the best risk-return ratio. Currently, the portfolio's high asset correlation limits its efficiency. By adjusting the allocation to include less correlated assets, the portfolio can potentially achieve a better balance between risk and return. Remember, efficiency here refers to the optimal risk-return trade-off, not necessarily diversification. Consider rebalancing the portfolio to improve its position on the Efficient Frontier.

Ongoing product costs Info

  • iShares Core MSCI World UCITS ETF USD (Acc) 0.20%
  • iShares NASDAQ 100 UCITS ETF USD (Acc) 0.36%
  • Vanguard S&P 500 UCITS Acc 0.07%
  • Weighted costs total (per year) 0.21%

The portfolio's total expense ratio (TER) is 0.21%, which is relatively low and supports better long-term performance by minimizing costs. Low costs are beneficial as they preserve more of the portfolio's returns. In comparison to industry averages, this TER is competitive, indicating cost efficiency. Maintaining low costs is crucial for maximizing investment returns over time. Regularly reviewing and optimizing for lower-cost alternatives can further enhance the portfolio's performance.

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