Balanced Portfolio with Broad Diversification and Strong Geographic Allocation Focused on Developed Markets

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

What type of investor this portfolio is suitable for

Balanced Investors

This portfolio is suitable for a balanced investor who seeks moderate risk and broad diversification. Such an investor typically has a medium to long-term investment horizon, aiming for growth while managing volatility. They are comfortable with significant equity exposure and are open to global opportunities. Their risk tolerance allows for potential drawdowns, but they prefer a portfolio that can weather different market conditions without excessive fluctuations.

Positions

  • iShares Core MSCI World UCITS ETF USD (Acc)
    EUNL - IE00B4L5Y983
    80.00%
  • iShares Core MSCI Emerging Markets IMI UCITS
    IS3N - IE00BKM4GZ66
    10.00%
  • iShares MSCI World Small Cap UCITS ETF USD (Acc)
    IUSN - IE00BF4RFH31
    10.00%

The portfolio is composed of three main ETFs, heavily weighted towards the iShares Core MSCI World UCITS ETF at 80%. This provides a significant exposure to global developed markets. The remaining 20% is split equally between the iShares Core MSCI Emerging Markets IMI UCITS and the iShares MSCI World Small Cap UCITS ETFs. This allocation indicates a balanced risk approach, with a broad diversification across different market caps and regions. To optimize, consider reviewing the balance between developed and emerging markets to ensure alignment with long-term goals.

Growth

Historically, the portfolio has demonstrated a strong performance with a CAGR of 12.35% and a maximum drawdown of -34.08%. This suggests a robust growth potential, although the drawdown indicates vulnerability during market downturns. The concentrated days making up 90% of returns highlight the importance of remaining invested during volatile periods. To mitigate risks, consider implementing strategies that can cushion against significant market drops, while maintaining exposure to growth opportunities.

Projection

Using a Monte Carlo simulation with 1,000 iterations, the portfolio's future performance shows promising potential. The median (50th percentile) end portfolio value is projected at 254.06%, with a high number of simulations yielding positive returns. This suggests a healthy risk-reward balance. A Monte Carlo simulation helps in understanding potential future outcomes by simulating various market conditions. Regularly revisiting these projections can help in adjusting the portfolio to stay on track with financial goals.

Asset classes

  • Stocks
    100%
  • Cash
    0%
  • Other
    0%
  • Bonds
    0%
  • No data
    0%

The portfolio is predominantly invested in stocks, accounting for over 99% of the allocation. This high equity exposure can drive growth but also introduces volatility. Minimal allocations in cash, bonds, and other asset classes provide limited downside protection. To enhance stability, consider diversifying into fixed income or alternative investments that can offer a buffer during market downturns, without significantly compromising growth potential.

Sectors

  • Technology
    25%
  • Financials
    16%
  • Consumer Discretionary
    11%
  • Industrials
    11%
  • Health Care
    10%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    4%
  • Real Estate
    3%
  • Utilities
    3%

Sector allocation is well-distributed, with a notable emphasis on Technology, Financial Services, and Consumer Cyclicals. This distribution aligns with growth sectors, which can drive performance. However, sector-specific risks exist, especially if market conditions shift unfavorably for these industries. Regularly reviewing sector exposure and rebalancing can help manage sector risks and capitalize on emerging opportunities in other sectors.

Regions

  • North America
    68%
  • Europe Developed
    14%
  • Japan
    5%
  • Asia Emerging
    5%
  • Asia Developed
    4%
  • Australasia
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%
  • Europe Emerging
    0%

Geographic allocation is heavily skewed towards North America, comprising over 68% of the portfolio. While this provides exposure to a stable and mature market, it may limit opportunities in other growing regions. Europe Developed and Japan also have significant allocations, while emerging markets have a smaller share. To capture global growth, consider increasing exposure to underrepresented regions, balancing the portfolio geographically.

Redundant positions

  • iShares MSCI World Small Cap UCITS ETF USD (Acc)
    iShares Core MSCI World UCITS ETF USD (Acc)
    High correlation

The portfolio shows high correlation between the iShares MSCI World Small Cap and iShares Core MSCI World ETFs. This indicates that these assets tend to move in tandem, which can amplify portfolio volatility. Diversifying into assets with lower correlation can reduce this risk, providing a smoother return profile. Regularly assess correlations to ensure that the portfolio remains well-diversified and aligned with risk tolerance.

Dividends

Dividend yield data is not provided, but given the equity-heavy nature of the portfolio, dividends could contribute to total returns. Typically, large-cap and developed market stocks offer stable dividends, which can provide income and help offset volatility. To maximize income potential, consider integrating dividend-focused strategies, ensuring that dividend yields align with income needs and overall portfolio objectives.

Ongoing product costs

  • iShares Core MSCI World UCITS ETF USD (Acc) 0.20%
  • iShares Core MSCI Emerging Markets IMI UCITS 0.18%
  • iShares MSCI World Small Cap UCITS ETF USD (Acc) 0.35%
  • Weighted costs total (per year) 0.21%

The total expense ratio of 0.21% reflects a cost-effective portfolio, considering the diversified exposure it provides. Low costs are crucial as they directly impact net returns. Maintaining a focus on minimizing investment costs can significantly enhance long-term performance. Regularly review expense ratios and explore opportunities to reduce fees further, ensuring that costs remain competitive without sacrificing diversification or quality.

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