Balanced and Highly Diversified Portfolio with Strong Growth Potential and Moderate Risk

Report created on Dec 4, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification

Positions

The portfolio is primarily composed of two ETFs, with a significant allocation to the Vanguard FTSE All-World UCITS ETF USD Accumulation, making up 90% of the portfolio. The remaining 10% is allocated to the iShares Core Global Aggregate Bond UCITS ETF. This composition indicates a strong focus on global equities with a moderate allocation to bonds, reflecting a balanced investment approach. Such an allocation can provide both growth and stability, as equities offer potential for higher returns, while bonds can help mitigate risk during market downturns.

Growth Info

Historically, the portfolio has demonstrated impressive performance, with a compound annual growth rate (CAGR) of 11.75%. Despite experiencing a maximum drawdown of -30.66%, the portfolio has shown resilience and the ability to recover. The performance highlights the benefits of a diversified portfolio, as it has managed to capture significant upside while weathering volatility. Investors should be mindful of the drawdown potential but can take comfort in the long-term growth prospects that this portfolio composition offers.

Projection Info

Using a Monte Carlo simulation, the portfolio's future performance was tested across 1,000 different scenarios. The simulation assumes a hypothetical initial investment and projects potential outcomes. The 50th percentile shows a potential return of 111.56%, while the 67th percentile suggests even higher returns of 159.05%. With 949 simulations resulting in positive returns, the portfolio's forward-looking prospects appear robust. This analysis provides confidence in the portfolio's ability to generate positive returns over time, though it's important to remain aware of the inherent uncertainties in market conditions.

Asset classes Info

  • Stocks
    90%
  • Bonds
    10%

The portfolio is diversified across two main asset classes: stocks and bonds. Stocks make up approximately 89.95% of the portfolio, while bonds account for about 9.90%. This allocation aligns with a balanced investment strategy, providing exposure to growth opportunities through equities while incorporating bonds for stability. The small allocation to cash and other asset classes further enhances diversification. Investors should consider maintaining this balance, as it offers a mix of growth potential and risk management, suitable for those with a moderate risk tolerance.

Sectors Info

  • Technology
    23%
  • Financials
    14%
  • Health Care
    10%
  • Consumer Discretionary
    9%
  • Industrials
    9%
  • Telecommunications
    7%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    4%
  • Utilities
    3%
  • Real Estate
    2%

The portfolio is well-diversified across several sectors, with the largest allocations in Technology (22.77%), Financial Services (14.49%), and Healthcare (9.75%). This sector distribution reflects a focus on industries with strong growth prospects. The inclusion of Consumer Cyclicals, Industrials, and Communication Services further enhances diversification. A balanced sector allocation can help mitigate risks associated with sector-specific downturns. Investors should continue to monitor sector performance and consider rebalancing if necessary to maintain a diversified exposure that aligns with their investment objectives.

Regions Info

  • North America
    58%
  • Europe Developed
    14%
  • Asia Emerging
    6%
  • Japan
    5%
  • Asia Developed
    4%
  • Australasia
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is heavily weighted towards North America, which constitutes 58.11% of the allocation. Europe Developed follows with 13.51%, while Asia Emerging and Japan collectively account for about 10.89%. This geographic distribution provides exposure to both developed and emerging markets, offering a balance of stability and growth potential. Investors should be aware of regional economic conditions and geopolitical risks that may impact performance. Maintaining a diversified geographic allocation can help capture opportunities across different markets while mitigating region-specific risks.

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 optimization chart suggests that the current allocation is close to the efficient frontier, offering a good balance between risk and return. Investors can achieve a riskier portfolio by increasing equity exposure or a more conservative one by adding bonds. However, the existing allocation already provides a well-rounded balance suitable for a moderate risk profile. Before optimizing further, it's crucial to ensure alignment with personal risk tolerance and financial goals. While optimization can enhance performance, maintaining a diversified and balanced approach remains key.

Ongoing product costs Info

  • iShares Core Global Aggregate Bond UCITS ETF 0.10%
  • Vanguard FTSE All-World UCITS ETF USD Accumulation 0.22%
  • Weighted costs total (per year) 0.21%

The portfolio's total expense ratio (TER) is 0.21%, which is relatively low and favorable for investors. The Vanguard FTSE All-World UCITS ETF USD Accumulation has a TER of 0.22%, while the iShares Core Global Aggregate Bond UCITS ETF has a TER of 0.1%. Low costs are crucial for maximizing returns over the long term, as fees can significantly impact overall performance. Investors should continue to prioritize cost-effective investment options and be mindful of additional fees that may arise. Maintaining a focus on minimizing costs is a smart strategy for enhancing portfolio returns.

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