Balanced Global Equity Portfolio with a Focus on Diversification and Cost Efficiency

Report created on May 9, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

This portfolio is structured around four major ETFs, each holding a 25% share, focusing on a broad spectrum of global equities. The allocation spans developed markets, emerging markets, and specific indexes like the S&P 500 and the FTSE All-World, aiming for a balanced exposure across geographic regions and sectors. This broad diversification is a strategic approach to spreading risk and capturing growth across different economic cycles and market conditions.

Growth Info

Historically, this portfolio has achieved a Compound Annual Growth Rate (CAGR) of 9.82%, with a maximum drawdown of -33.14%. These metrics indicate a strong performance with resilience during market downturns. The days contributing most to returns highlight the portfolio's potential for significant gains on specific, impactful trading days. Comparing these figures to benchmark indexes can provide further context on performance, suggesting this portfolio has navigated market volatility effectively.

Projection Info

Monte Carlo simulations, using historical data to forecast future performance, show a wide range of outcomes with a median annualized return of 10.32%. This method, while informative, is based on past trends and cannot predict future market movements with certainty. However, the high percentage of simulations resulting in positive returns underscores the portfolio's potential resilience and growth prospects in diverse market scenarios.

Asset classes Info

  • Stocks
    100%

The portfolio's allocation is entirely in stocks, with no presence in bonds, cash, or alternative investments. This singular focus on equities enhances growth potential but also exposes the portfolio to higher market volatility. Diversifying across different asset classes could provide a buffer during stock market downturns, potentially smoothing out returns over time.

Sectors Info

  • Technology
    25%
  • Financials
    18%
  • Consumer Discretionary
    11%
  • Health Care
    9%
  • Industrials
    9%
  • Telecommunications
    9%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    4%
  • Utilities
    3%
  • Real Estate
    2%

Sector allocation showcases a significant tilt towards technology, financial services, and consumer cyclicals, which are sectors known for their growth potential. However, this concentration also increases susceptibility to sector-specific risks. Balancing this with more defensive sectors like healthcare and utilities could provide stability in different market conditions.

Regions Info

  • North America
    60%
  • Asia Emerging
    14%
  • Europe Developed
    8%
  • Asia Developed
    8%
  • Africa/Middle East
    3%
  • Japan
    3%
  • Latin America
    2%
  • Australasia
    1%
  • Europe Emerging
    1%

Geographic distribution heavily favors North America, followed by emerging markets in Asia and developed European countries. This reflects a strong bias towards established markets with a significant portion in the U.S., which may limit exposure to potential growth in other regions. Increasing allocations to underrepresented areas could enhance global diversification and access to new growth opportunities.

Market capitalization Info

  • Mega-cap
    48%
  • Large-cap
    33%
  • Mid-cap
    17%
  • Small-cap
    1%

The emphasis on mega and big-cap stocks suggests a preference for stability and lower volatility associated with larger, more established companies. While this can offer a degree of safety, incorporating a greater mix of medium, small, and micro-cap stocks could enhance growth prospects and diversification, albeit with higher risk.

Redundant positions Info

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

The high correlation among the ETFs, particularly those tracking global and developed market equities, indicates overlapping holdings that may not contribute significantly to diversification. Reducing overlap by reallocating assets among less correlated investment options can enhance the portfolio's risk-adjusted returns.

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 current asset allocation, while broadly diversified, shows room for optimization by reducing high correlations among the chosen ETFs. Employing the Efficient Frontier concept could identify a mix of assets that achieves the best possible risk-return balance, possibly suggesting a shift towards less correlated or different asset classes to improve diversification and potential returns.

Ongoing product costs Info

  • iShares Core MSCI World UCITS ETF USD (Acc) 0.20%
  • iShares Core MSCI Emerging Markets IMI UCITS 0.18%
  • Vanguard S&P 500 UCITS Acc 0.07%
  • Vanguard FTSE All-World UCITS ETF USD Accumulation 0.22%
  • Weighted costs total (per year) 0.17%

With an average Total Expense Ratio (TER) of 0.17%, the portfolio is cost-efficient, minimizing the drag on returns due to fees. This is crucial for long-term growth, as lower costs directly translate to higher net returns for investors. Continuously monitoring and opting for cost-effective investment options remains a key strategy for enhancing portfolio performance.

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