A tech-focused growth portfolio with significant North American exposure and moderate diversification

Report created on Mar 8, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio is heavily weighted towards equities, with a strong emphasis on ETFs. The Vanguard S&P 500 UCITS Acc makes up over half the portfolio, while tech-focused ETFs and individual stocks like NVIDIA contribute to its growth profile. This composition leans towards a high-growth strategy, aligning with the client's growth risk classification. Compared to a typical balanced portfolio, it lacks fixed income or alternative assets, which might add stability. Consider diversifying asset types to reduce volatility.

Growth Info

Historically, the portfolio has shown impressive performance, with a CAGR of 17.18%. This growth is indicative of the tech-heavy and U.S.-centric nature of the holdings. However, the max drawdown of -33.18% highlights its vulnerability during market downturns. Compared to broader market benchmarks, this performance is strong, yet the volatility remains a concern. To mitigate potential losses, consider incorporating assets with lower volatility or counter-cyclical characteristics.

Projection Info

Monte Carlo simulations, which use historical data to predict potential future outcomes, show a wide range of possible returns. The median projection suggests significant growth, but as with all projections, there's uncertainty. The portfolio's potential for high returns is balanced by the risk of substantial losses. Diversifying across more asset classes could help stabilize future performance by spreading risk across different economic conditions.

Asset classes Info

  • Stocks
    100%

The portfolio is entirely composed of stocks, which may result in higher volatility. While stocks offer growth potential, the absence of bonds or other asset classes limits diversification. Compared to a typical diversified portfolio, this allocation may expose the investor to greater market swings. Introducing bonds or real assets could provide some balance and reduce overall risk, aligning with a more diversified investment strategy.

Sectors Info

  • Technology
    55%
  • Financials
    9%
  • Consumer Discretionary
    7%
  • Health Care
    6%
  • Telecommunications
    6%
  • Industrials
    5%
  • Utilities
    4%
  • Consumer Staples
    3%
  • Energy
    2%
  • Real Estate
    1%
  • Basic Materials
    1%

With 55% allocated to technology, the portfolio is highly concentrated in this sector. This concentration can lead to higher returns when the tech sector performs well but increases risk during downturns, especially with interest rate hikes. Other sectors like financial services and healthcare are represented, but in smaller proportions. Balancing sector allocations could enhance stability and reduce sector-specific risks, aligning with broader market trends.

Regions Info

  • North America
    88%
  • Europe Developed
    8%
  • Japan
    2%
  • Asia Emerging
    1%

The portfolio is predominantly North American, with 88% exposure. While this has been beneficial given historical U.S. market strength, it limits geographic diversification. Europe and Japan have minor allocations, while emerging markets are nearly absent. Expanding exposure to other regions, especially emerging markets, could provide growth opportunities and reduce reliance on North American market conditions.

Market capitalization Info

  • Mega-cap
    48%
  • Large-cap
    34%
  • Mid-cap
    16%
  • Small-cap
    1%

The portfolio's market capitalization skew towards mega and big companies suggests a focus on established, stable entities. This can provide some stability, but the low allocation to small and mid-cap stocks may limit growth potential. Historically, smaller companies offer higher growth but come with increased risk. Balancing market cap exposure could enhance diversification and capture growth from smaller, innovative companies.

Redundant positions Info

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

The portfolio includes highly correlated assets like the Vanguard S&P 500 and iShares Core MSCI World ETFs, which may not enhance diversification. Correlated assets tend to move together, reducing the benefits of diversification, especially during market downturns. To improve risk management, consider replacing some correlated assets with those that have less overlap, thus enhancing the portfolio's overall resilience.

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 potentially be optimized using the Efficient Frontier, which aims to achieve the best possible risk-return ratio. Currently, the focus should be on reducing overlap in highly correlated assets to enhance diversification. Efficiency doesn't necessarily mean diversification, but rather achieving the optimal balance of risk and return with the existing assets.

Dividends Info

  • iShares MSCI World Information Technology Sector ESG UCITS ETF USD Inc 0.40%
  • iShares Global Clean Energy UCITS 1.40%
  • Weighted yield (per year) 0.14%

The portfolio's dividend yield is relatively low at 0.14%, reflecting its growth focus. While dividends can provide steady income, growth-oriented portfolios often prioritize capital appreciation. Investors seeking income might consider adding higher-yielding assets. However, for those focused on growth, maintaining the current structure could align with long-term capital gains objectives.

Ongoing product costs Info

  • iShares MSCI World Information Technology Sector ESG UCITS ETF USD Inc 0.25%
  • iShares Core MSCI World UCITS ETF USD (Acc) 0.20%
  • iShares Global Clean Energy UCITS 0.65%
  • iShares Core MSCI Emerging Markets IMI UCITS 0.18%
  • iShares MSCI World Small Cap UCITS ETF USD (Acc) 0.35%
  • Vanguard S&P 500 UCITS Acc 0.07%
  • Weighted costs total (per year) 0.14%

The total expense ratio (TER) of 0.14% is impressively low, supporting better long-term performance by minimizing costs. This aligns well with best practices for cost-efficient investing. Keeping costs low is crucial for maximizing net returns, especially in a growth-focused portfolio. Regularly reviewing and optimizing costs can ensure the portfolio remains competitive and efficient.

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