Cautious Investor's Portfolio with Broad Diversification and Low Costs for Long-Term Growth

Report created on Jun 14, 2024

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.

Positions

The portfolio is comprised of three ETFs, with the Vanguard FTSE All-World UCITS ETF making up a significant 60%. The Amundi Stoxx Europe 600 UCITS ETF follows with 30%, and the Xtrackers Nikkei 225 UCITS ETF rounds it out at 10%. This composition indicates a focus on global equity exposure, offering a broad diversification across regions. With a cautious risk profile, this portfolio is designed to mitigate risks while aiming for steady growth. Consider regularly reviewing the allocation to ensure it aligns with your long-term investment goals and risk tolerance.

Growth Info

Historically, the portfolio has demonstrated a solid performance with a compound annual growth rate (CAGR) of 13.94% and a maximum drawdown of -16.39%. This suggests resilience during market downturns while still achieving robust returns. The 24 days that account for 90% of returns highlight the importance of staying invested to capture these key periods. While past performance doesn't guarantee future results, the historical data indicates a well-performing portfolio. Maintain your investment strategy to continue benefiting from favorable market conditions.

Projection Info

A Monte Carlo simulation, which uses random sampling to model potential future outcomes, was conducted with 1,000 simulations. Assuming a hypothetical initial investment, the simulation projects a median portfolio value increase of 403.01% at the 50th percentile. Nearly all simulations (999) show positive returns, reflecting the portfolio's potential for growth. The annualized return across simulations is 13.0%, suggesting a favorable outlook. Continue to monitor the portfolio's performance and adjust as necessary to align with changing market conditions and personal financial goals.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted in stocks, accounting for 99.74% of the allocation. This focus on equities suggests a strategy aimed at capital appreciation, which can offer significant returns over time. However, it also introduces volatility, particularly for a cautious investor. Diversifying into other asset classes, such as bonds or commodities, could reduce risk and provide a more balanced approach. Consider assessing your risk tolerance and investment horizon to determine if a more diversified allocation is appropriate for your financial objectives.

Sectors Info

  • Technology
    20%
  • Financials
    16%
  • Industrials
    13%
  • Health Care
    12%
  • Consumer Discretionary
    11%
  • Telecommunications
    7%
  • Consumer Staples
    7%
  • Basic Materials
    5%
  • Energy
    4%
  • Utilities
    3%
  • Real Estate
    2%

With exposure to 11 sectors, the portfolio is well-diversified across industries. The largest allocations are in Technology, Financial Services, and Industrials, which can drive growth but also introduce sector-specific risks. A diversified sector allocation helps mitigate the impact of downturns in any single industry. To further enhance diversification, regularly review sector weights and consider rebalancing if certain sectors become too dominant. Maintaining a balanced sector allocation can help ensure steady performance and reduce vulnerability to market fluctuations.

Regions Info

  • North America
    39%
  • Europe Developed
    39%
  • Japan
    14%
  • Asia Emerging
    4%
  • Asia
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    1%

The portfolio's geographic allocation is primarily focused on North America (38.95%) and Europe Developed (38.64%), with additional exposure to Japan and other regions. This broad geographic diversification helps mitigate regional risks and capture growth opportunities in different markets. However, the heavy reliance on developed markets might limit exposure to emerging markets, which can offer higher growth potential. Consider assessing whether the current geographic distribution aligns with your investment goals and risk tolerance, and adjust accordingly to optimize the portfolio's performance.

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 efficient for a cautious investor. However, to achieve a riskier or more conservative portfolio, consider adjusting the equity allocation along the efficient frontier. Increasing exposure to equities can enhance returns but also heighten risk, while incorporating more bonds may reduce risk and provide stability. Focus on aligning the portfolio with your risk tolerance and financial goals before making significant changes. Regularly reviewing and rebalancing the portfolio can help maintain an optimal allocation over time.

Ongoing product costs Info

  • Amundi Stoxx Europe 600 UCITS ETF C EUR 0.07%
  • Vanguard FTSE All-World UCITS ETF USD Accumulation 0.22%
  • Xtrackers Nikkei 225 UCITS ETF 1C EUR 0.09%
  • Weighted costs total (per year) 0.16%

The portfolio's total expense ratio (TER) is 0.16%, which is relatively low and helps maximize returns by minimizing costs. Low fees are crucial for long-term investment success, as they compound over time. The individual ETF costs are also competitive, with the Amundi Stoxx Europe 600 UCITS ETF being particularly cost-effective at 0.07%. Continue to monitor the expense ratios of your investments and consider low-cost alternatives if any fees become excessive. Keeping costs low is a key component of an effective investment strategy.

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