A balanced portfolio with strong technology focus and high North American exposure

Report created on Jan 31, 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 consists of two ETFs: the SPDR MSCI ACWI IMI UCITS ETF (59%) and the Invesco EQQQ NASDAQ-100 UCITS ETF (41%). The heavy weighting in these ETFs means the portfolio is entirely invested in equities, which aligns with a balanced risk classification. Compared to a typical balanced portfolio, which might include bonds or alternative assets, this portfolio is more equity-focused. This could lead to higher volatility but also offers the potential for greater long-term growth. Consider adding fixed income or alternative assets to reduce risk and increase diversification.

Growth Info

The portfolio has delivered a strong historical performance with a CAGR of 14.79%, indicating robust growth over time. However, it also experienced a maximum drawdown of -17.66%, which suggests a notable level of risk during market downturns. This performance compares favorably with many equity benchmarks, reflecting the growth potential of its high-tech and global exposure. While past performance is not a guarantee of future results, it does suggest resilience and potential for continued growth. Regularly reviewing performance against benchmarks can help ensure alignment with long-term goals.

Projection Info

The Monte Carlo simulation, which uses historical data to project future outcomes, shows a promising outlook for this portfolio. With 1,000 simulations, the median projected return is 650.8%, and 999 simulations resulted in positive returns. However, this is based on past data and assumes similar future conditions, which may not hold true. Despite the optimistic projections, investors should remain cautious and prepared for potential volatility. Considering a range of possible outcomes can help in setting realistic expectations and preparing for various market scenarios.

Asset classes Info

  • Stocks
    100%

This portfolio is entirely allocated to stocks, lacking exposure to other asset classes like bonds or real estate. While this can drive higher returns during bull markets, it also increases volatility and risk during downturns. Compared to a more diversified portfolio with multiple asset classes, this setup may not provide the same level of risk mitigation. Introducing a mix of asset classes could enhance diversification, potentially smoothing returns over time and reducing sensitivity to stock market fluctuations.

Sectors Info

  • Technology
    37%
  • Consumer Discretionary
    13%
  • Telecommunications
    11%
  • Financials
    10%
  • Industrials
    8%
  • Health Care
    8%
  • Consumer Staples
    5%
  • Basic Materials
    3%
  • Energy
    3%
  • Utilities
    2%
  • Real Estate
    2%

The portfolio is heavily weighted towards technology, which comprises 37% of its allocation. Other significant sectors include consumer cyclicals (13%) and communication services (11%). This tech concentration can lead to higher volatility, especially in environments of rising interest rates or regulatory changes. While tech has driven strong returns recently, balancing this with other sectors could reduce risk. Consider diversifying into sectors with different economic sensitivities to build a more resilient portfolio.

Regions Info

  • North America
    80%
  • Europe Developed
    9%
  • Asia Emerging
    3%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    1%

The geographic allocation is heavily skewed towards North America, accounting for 80% of the portfolio. This concentration could expose the portfolio to regional risks, such as economic or political changes in the US. Compared to a more globally diversified portfolio, this one may benefit from increased exposure to emerging markets or other developed regions. Broadening geographic exposure can help mitigate risks associated with any single region and capture growth opportunities worldwide.

Market capitalization Info

  • Mega-cap
    47%
  • Large-cap
    34%
  • Mid-cap
    15%
  • Small-cap
    3%
  • Micro-cap
    1%

The portfolio primarily invests in large-cap companies, with 81% in mega and big caps. This focus provides stability and lower volatility compared to small or micro-cap stocks, which only make up 4% of the portfolio. Large-cap companies are often established with steady growth, but they might not offer the same high growth potential as smaller companies. Including more small and mid-cap stocks could increase growth potential and enhance diversification, albeit with higher risk.

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's current allocation can be optimized for risk-return balance using the Efficient Frontier concept. This involves adjusting the weights of existing assets to achieve the best possible risk-return ratio. However, this optimization is limited to the current asset choices and doesn't necessarily improve diversification. Rebalancing periodically to maintain this optimal allocation can ensure that the portfolio remains aligned with its risk-return objectives over time.

Ongoing product costs Info

  • Invesco EQQQ NASDAQ-100 UCITS ETF Acc 0.35%
  • SSgA SPDR ETFs Europe I Public Limited Company - SPDR MSCI ACWI IMI UCITS ETF 0.40%
  • Weighted costs total (per year) 0.38%

The portfolio's total expense ratio (TER) is 0.38%, which is relatively low and supports better long-term returns by minimizing costs. This is beneficial as high fees can erode investment gains over time. Keeping costs in check is crucial for maximizing net returns. Periodically reviewing expense ratios and comparing them to similar investment options can ensure that the portfolio remains cost-effective and aligned with financial goals.

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