A balanced portfolio with strong US focus and tech-heavy sector concentration

Report created on Feb 20, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

This portfolio is heavily weighted towards the Vanguard S&P 500 UCITS ETF, making up 76.78% of the total allocation. The rest is distributed among ASML Holding NV and two ETFs focusing on emerging markets and clean energy. Compared to a balanced benchmark, this composition leans heavily towards US equities, potentially increasing exposure to US market risks. The high concentration in a single ETF could limit diversification, which is usually a key component of risk management in balanced portfolios. Consider diversifying further by adding assets from different regions or asset classes to mitigate specific market risks.

Growth Info

The portfolio has demonstrated strong historic performance with a CAGR of 17.30%, significantly outpacing many benchmarks. However, it also experienced a maximum drawdown of -32.52%, indicating substantial risk during market downturns. The high CAGR is attractive, but the drawdown highlights the potential volatility. Historical performance provides a snapshot of past success, but it’s crucial to remember that past returns are not indicative of future results. Diversifying into less volatile assets could help manage potential future downturns and stabilize returns.

Projection Info

The Monte Carlo simulation offers a glimpse into potential future outcomes, projecting a median return of 492.8%. However, the 5th percentile suggests a potential downside of 11.4%, reminding investors of inherent uncertainties. Monte Carlo simulations use historical data to project future scenarios, but they can't predict exact outcomes. The positive results in 963 out of 1,000 simulations are promising, yet it's wise to prepare for volatility. Regularly reviewing and adjusting allocations based on changing market conditions can help in maintaining alignment with investment goals.

Asset classes Info

  • Stocks
    100%

The portfolio is entirely invested in stocks, lacking exposure to bonds or other asset classes. While stocks offer growth potential, they can also introduce significant volatility. A more diversified asset allocation typically includes bonds, which can provide stability and income, helping to cushion against stock market fluctuations. Consider incorporating fixed-income assets to balance risk and return, especially in uncertain economic climates. This could improve the diversification score and potentially reduce the overall risk of the portfolio.

Sectors Info

  • Technology
    41%
  • Financials
    12%
  • Consumer Discretionary
    10%
  • Health Care
    8%
  • Telecommunications
    8%
  • Industrials
    6%
  • Consumer Staples
    5%
  • Utilities
    3%
  • Energy
    3%
  • Basic Materials
    2%
  • Real Estate
    2%

Technology dominates the sector allocation at 41%, followed by financial services and consumer cyclicals. This tech-heavy focus may lead to higher volatility, particularly during periods of interest rate hikes or tech sector downturns. While technology has driven significant growth, a more balanced sector distribution could mitigate sector-specific risks. Consider diversifying into sectors like healthcare or consumer defensive, which tend to be more resilient during economic downturns, to achieve a more stable sector allocation.

Regions Info

  • North America
    77%
  • Europe Developed
    14%
  • Asia Emerging
    6%
  • Asia Developed
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%

The geographic allocation is heavily skewed towards North America at 77%, with limited exposure to Europe and emerging markets. This concentration increases susceptibility to regional economic and political risks. A more globally diversified portfolio could better withstand regional downturns and capture growth opportunities in underrepresented markets. Consider increasing investments in Europe or emerging markets to enhance geographic diversification and potentially improve long-term returns.

Market capitalization Info

  • Mega-cap
    54%
  • Large-cap
    30%
  • Mid-cap
    15%
  • Small-cap
    1%

The portfolio's market capitalization leans heavily towards mega-cap stocks, comprising 54% of the allocation. While mega-cap stocks are generally more stable and established, this concentration can limit exposure to the growth potential of smaller companies. Introducing more small and mid-cap stocks could enhance diversification and provide opportunities for higher growth, albeit with increased risk. Balancing market cap exposure can help capture diverse market dynamics and improve overall portfolio 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 seeks the best possible risk-return ratio. However, optimization depends on the current assets and their allocation. Adjusting the balance between the existing assets might enhance efficiency, but it may not necessarily improve diversification or achieve other investment goals. Consider using optimization tools to explore different allocation scenarios, aiming for a balance between risk and return that aligns with your investment objectives.

Dividends Info

  • iShares Global Clean Energy UCITS 1.30%
  • Vanguard S&P 500 UCITS ETF 0.50%
  • Weighted yield (per year) 0.40%

The portfolio's dividend yield is relatively low at 0.40%, with the highest yield from the iShares Global Clean Energy UCITS ETF at 1.30%. While dividends can provide a steady income stream, the current yield may not significantly contribute to total returns. Investors seeking income might consider increasing exposure to higher-yielding assets. However, it's important to balance income generation with growth potential, as high-dividend stocks may not offer the same growth prospects as lower-yielding counterparts.

Ongoing product costs Info

  • iShares Global Clean Energy UCITS 0.65%
  • Vanguard FTSE Emerging Markets UCITS 0.22%
  • Vanguard S&P 500 UCITS ETF 0.07%
  • Weighted costs total (per year) 0.08%

The portfolio's total expense ratio (TER) is impressively low at 0.08%, indicating cost efficiency. Lower costs enhance long-term returns by minimizing the drag on performance. The Vanguard S&P 500 UCITS ETF contributes significantly to this low TER with its 0.07% cost. Maintaining low costs is a positive aspect of this portfolio, but it's essential to ensure that cost-saving measures do not compromise diversification or growth potential. Regularly reviewing expense ratios can help maintain cost efficiency.

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