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Growth-Oriented Portfolio with Strong Global Diversification and High Potential Returns but Elevated Risk

Report created on Nov 23, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification
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Positions

The portfolio composition is diverse, with a mix of ETFs and individual stocks. It includes well-known ETFs such as iShares Core MSCI World and iShares S&P 500, as well as popular stocks like Johnson & Johnson and Amazon. This composition indicates a preference for both broad market exposure and specific company investments. Having a mix of ETFs and individual stocks can help capture both market-wide trends and company-specific growth. To improve, consider periodically reviewing the balance between ETFs and individual stocks to ensure alignment with your investment goals.

Growth Info

Historically, the portfolio has performed impressively, with a CAGR of 22.64%. This suggests significant growth potential, though it also comes with a max drawdown of -44.58%, indicating susceptibility to market volatility. Understanding these metrics is crucial, as they highlight the portfolio's ability to generate returns and its potential risks. To enhance performance, consider strategies to mitigate drawdowns, such as setting stop-loss orders or diversifying further into less volatile assets.

Projection Info

Using a Monte Carlo simulation with 1,000 iterations, the forward projection shows a wide range of outcomes, with a median return of 2,506.05%. This simulation provides a probabilistic view of future performance based on historical data, helping to understand potential risks and returns. While the median projection is promising, it's essential to prepare for less favorable scenarios. Consider adjusting the portfolio to increase resilience against market downturns, possibly by including more defensive assets.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily skewed towards stocks, with minimal exposure to other asset classes like bonds. This concentration in equities aligns with a growth-oriented strategy but increases vulnerability to market fluctuations. It's essential to recognize that a lack of asset class diversification can lead to increased risk. To balance the risk, consider incorporating other asset classes like bonds or real estate, which may provide stability during market downturns.

Sectors Info

  • Technology
    26%
  • Consumer Discretionary
    22%
  • Health Care
    17%
  • Financials
    11%
  • Industrials
    8%
  • Telecommunications
    6%
  • Consumer Staples
    3%
  • Basic Materials
    2%
  • Energy
    2%
  • Utilities
    2%
  • Real Estate
    1%

Sector allocation is diverse, with a significant focus on technology, consumer cyclicals, and healthcare. This allocation can capture growth from innovative industries but may also lead to sector-specific risks. Understanding the impact of sector allocation is vital, as it influences the portfolio's sensitivity to economic cycles. To optimize, periodically review sector exposure and consider rebalancing to maintain alignment with evolving market conditions and personal risk tolerance.

Regions Info

  • North America
    71%
  • Europe Developed
    19%
  • Asia Emerging
    4%
  • Asia Developed
    3%
  • Japan
    1%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is predominantly invested in North America, with some exposure to Europe and Asia. This allocation offers access to major global markets but may miss opportunities in underrepresented regions. Geographical diversification is crucial, as it can reduce the impact of regional economic downturns. Consider exploring opportunities in less-represented regions to enhance diversification and potentially capture growth in emerging markets.

Redundant positions Info

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

The portfolio contains highly correlated assets, particularly among the ETFs like iShares S&P 500 and iShares Core MSCI World. High correlation indicates that these assets tend to move in tandem, which can limit diversification benefits. Recognizing asset correlations is important to avoid redundancy and enhance risk-adjusted returns. To improve, consider reducing exposure to highly correlated assets and exploring alternatives that provide genuine diversification.

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.

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The portfolio optimization chart suggests that before optimizing, it's crucial to address the issue of overlapping assets that offer little diversification. By removing highly correlated assets, the portfolio can achieve better diversification benefits and potentially improve risk-adjusted returns. To move towards a riskier portfolio, consider increasing exposure to high-growth sectors or regions. Conversely, for a more conservative approach, allocate more towards stable, income-generating assets. It's essential to find the right balance along the efficient frontier that aligns with your risk tolerance and financial objectives.

Dividends Info

  • Johnson & Johnson 2.50%
  • Weighted yield (per year) 0.30%

The portfolio's dividend yield is relatively low, with Johnson & Johnson being a notable contributor. A low dividend yield suggests a focus on capital appreciation rather than income generation. Understanding dividend yields is essential, especially for investors seeking regular income. If income is a priority, consider reallocating some investments towards higher-yielding assets or dividend-focused funds to enhance income potential.

Ongoing product costs Info

  • iShares Core MSCI World UCITS ETF USD (Acc) 0.20%
  • iShares MSCI EM UCITS ETF USD (Acc) 0.18%
  • iShares S&P 500 EUR Hedged UCITS ETF (Acc) 0.20%
  • Weighted costs total (per year) 0.09%

The portfolio's costs are relatively low, with ETFs like iShares MSCI EM and iShares S&P 500 having low expense ratios. Keeping investment costs low is crucial, as high costs can erode returns over time. Understanding the impact of costs is important for maximizing net returns. To maintain cost efficiency, regularly review expense ratios and consider lower-cost alternatives if available, ensuring that fees remain aligned with the value provided by the investments.

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