A cautious portfolio with strong U.S. focus and moderate diversification across global equities
Report created on Feb 24, 2025Risk profile
3/7
Diversification profile
3/5
Positions
-
VU Vanguard S&P 500 UCITS ETF
VUSA - IE00B3XXRP09 44.93% -
EU iShares Core MSCI World UCITS ETF USD (Acc)
EUNL - IE00B4L5Y983 25.19% -
VW Vanguard FTSE All-World UCITS ETF USD Accumulation
VWCE - IE00BK5BQT80 19.69% -
PP iShares Physical Gold ETC EUR
PPFB - IE00B4ND3602 10.18%
The portfolio mainly consists of large-cap equity ETFs, with a significant 44.93% allocation to the Vanguard S&P 500 UCITS ETF. This suggests a strong focus on established U.S. companies. The iShares Core MSCI World UCITS ETF and Vanguard FTSE All-World UCITS ETF further diversify the portfolio, adding global exposure. The 10.18% allocation to iShares Physical Gold ETC provides a hedge against inflation and market volatility. This composition aligns with a moderately diversified strategy, balancing growth potential with risk management. Consider assessing if this allocation meets your investment objectives, especially given the heavy reliance on U.S. equities.
Growth
Historically, the portfolio has performed well, achieving a compound annual growth rate (CAGR) of 14.11%. This is impressive, considering the cautious risk profile. The maximum drawdown of -14.53% indicates moderate volatility during downturns. Compared to a benchmark, this performance suggests the portfolio is well-positioned for steady growth. However, it's essential to remember that past performance doesn't guarantee future results. Regularly reviewing performance against personal goals can help ensure alignment with expectations.
Projection
The Monte Carlo simulation, which uses historical data to estimate future outcomes, projects an annualized return of 15.18%. With 999 out of 1,000 simulations showing positive returns, the outlook is optimistic. However, it's crucial to note that simulations are based on historical trends and assumptions, which may not always hold true. Monitoring market conditions and adjusting the portfolio as needed can help align it with potential future scenarios.
Asset classes
- Stocks 90%
- Other 10%
The portfolio's asset allocation is 90% stocks and 10% other assets, primarily gold. This mix provides a good balance between growth and stability. Stocks offer the potential for higher returns, while gold acts as a safety net during market volatility. Compared to benchmarks, this allocation aligns with a moderately diversified strategy. Consider whether this balance suits your risk tolerance and investment goals, especially if you're seeking more stability.
Sectors
- Technology 27%
- Financials 13%
- Consumer Discretionary 10%
- Health Care 9%
- Telecommunications 8%
- Industrials 8%
- Consumer Staples 5%
- Energy 3%
- Utilities 2%
- Basic Materials 2%
- Real Estate 2%
The sector allocation is heavily weighted towards technology, at 27%, followed by financial services and consumer cyclicals. This tech-heavy focus could lead to higher volatility during market fluctuations, particularly if interest rates rise. However, it also positions the portfolio for potential high growth. Diversifying further into less represented sectors might help mitigate risks and provide more balanced exposure.
Regions
- North America 77%
- Europe Developed 7%
- Japan 2%
- Asia Emerging 1%
- Asia Developed 1%
- Australasia 1%
Geographically, the portfolio is heavily concentrated in North America, with 77% exposure. This focus on the U.S. market has historically been beneficial, but it may limit diversification benefits. The remaining allocation is spread thinly across Europe and Asia. Increasing exposure to underrepresented regions, such as emerging markets, could enhance diversification and reduce reliance on the U.S. economy.
Market capitalization
- Mega-cap 42%
- Large-cap 31%
- Mid-cap 16%
The portfolio is predominantly invested in large-cap stocks, with 42% in mega-cap and 31% in big-cap companies. This focus on established firms offers stability and lower risk, but it may limit growth potential compared to smaller-cap stocks. While large caps are generally less volatile, consider whether adding mid or small-cap stocks could enhance diversification and growth prospects.
Redundant positions
-
High correlationiShares Core MSCI World UCITS ETF USD (Acc)Vanguard S&P 500 UCITS ETFVanguard FTSE All-World UCITS ETF USD Accumulation
The portfolio's assets are highly correlated, especially among the equity ETFs. This means they tend to move in the same direction, which could limit diversification benefits during market downturns. Reducing overlap by selecting less correlated assets might improve risk management and enhance the portfolio's resilience. Consider diversifying across different asset types or sectors to achieve this.
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 be optimized for a better risk-return balance using the Efficient Frontier concept. This involves adjusting asset allocations to achieve the best possible return for a given level of risk. Currently, the portfolio's expected return is below the optimal level. Consider rebalancing to include less correlated assets, which may improve efficiency without increasing risk.
Dividends
- Vanguard S&P 500 UCITS ETF 0.50%
- Weighted yield (per year) 0.22%
The portfolio's dividend yield is relatively low at 0.22%, with the Vanguard S&P 500 UCITS ETF contributing 0.50%. While dividends can provide a steady income stream, the focus here is more on capital appreciation. If income generation is a priority, consider increasing allocations to dividend-paying assets. However, ensure such changes align with your overall investment strategy and risk tolerance.
Ongoing product costs
- iShares Core MSCI World UCITS ETF USD (Acc) 0.20%
- Vanguard S&P 500 UCITS ETF 0.07%
- Vanguard FTSE All-World UCITS ETF USD Accumulation 0.22%
- Weighted costs total (per year) 0.13%
The portfolio's total expense ratio (TER) is impressively low at 0.13%, indicating cost-efficiency. Lower costs can significantly enhance long-term returns, as they reduce the drag on performance. This alignment with best practices supports the portfolio's growth potential. Continuously monitoring and minimizing costs can further optimize returns, ensuring more of your investment works for you.
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