A globally diversified equity portfolio with a focus on North America and tech sector concentration

Report created on Jan 26, 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 is composed of two ETFs: Vanguard FTSE All-World UCITS ETF (80%) and iShares S&P 500 Swap UCITS ETF (20%). With both ETFs being equity-focused, the portfolio lacks direct exposure to other asset classes like bonds or commodities. A balanced profile suggests a moderate risk tolerance, yet the 100% equity allocation might not align with typical balanced portfolios that include fixed-income securities to mitigate volatility. Consider introducing a small percentage of bonds or alternative assets to enhance diversification and potentially reduce risk.

Growth Info

Historically, the portfolio achieved a strong Compound Annual Growth Rate (CAGR) of 15.73%, with a maximum drawdown of -16.31%. This performance indicates robust growth, albeit with some volatility. Comparing these figures to benchmarks can help gauge relative success, but remember, past performance doesn't guarantee future results. To maintain or improve performance, regularly review the portfolio's alignment with your risk tolerance and investment goals, considering adjustments as market conditions change.

Projection Info

The Monte Carlo simulation, with 1,000 runs, shows a wide range of potential outcomes, with end values between 332.7% and 1,168.0%. This tool uses historical data to model future scenarios, highlighting the uncertainty of future returns. While the median projection is promising, it's crucial to remember that these simulations depend on past data and assumptions. Regularly reassessing risk tolerance and staying informed on market changes can help in making informed decisions, even as actual outcomes may differ from projections.

Asset classes Info

  • Stocks
    100%

The portfolio is fully allocated to stocks, which can offer substantial growth potential but also increased volatility. The absence of other asset classes like bonds or real estate means the portfolio might not benefit from the risk reduction typically provided by such diversification. To align more closely with balanced portfolio norms, consider introducing a mix of asset classes. This could help cushion against market downturns and provide a more stable return profile over time.

Sectors Info

  • Technology
    28%
  • Financials
    16%
  • Consumer Discretionary
    11%
  • Health Care
    10%
  • Industrials
    9%
  • Telecommunications
    9%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    3%
  • Utilities
    3%
  • Real Estate
    2%

Sector allocation reveals a significant concentration in technology (28%), followed by financial services (16%) and consumer cyclicals (11%). While tech-heavy portfolios can experience rapid growth, they may also face higher volatility, especially during economic shifts or interest rate changes. Balancing exposure across sectors could enhance stability. Consider gradually increasing allocations to underweighted sectors to reduce reliance on any single sector and achieve a more balanced risk-return profile.

Regions Info

  • North America
    73%
  • Europe Developed
    11%
  • Asia Emerging
    5%
  • Japan
    5%
  • Asia Developed
    3%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    1%

The portfolio is heavily weighted towards North America (73%), with smaller allocations to Europe and Asia. This geographic concentration can lead to higher exposure to regional economic shifts, such as U.S. market volatility. Diversifying geographically can reduce such risks and capture growth opportunities in other regions. Increasing exposure to emerging markets or underrepresented regions could enhance diversification and provide a hedge against potential downturns in the U.S. market.

Market capitalization Info

  • Mega-cap
    47%
  • Large-cap
    35%
  • Mid-cap
    17%

Market capitalization is skewed towards mega-cap (47%) and big-cap (35%) stocks, with no allocation to small or micro-cap stocks. Large-cap stocks are generally more stable, but they could limit growth potential compared to smaller companies. Including small or mid-cap stocks might enhance growth opportunities and add diversification benefits. Consider a more balanced approach across different market caps to capture opportunities across the market spectrum and potentially improve long-term returns.

Redundant positions Info

  • Vanguard FTSE All-World UCITS ETF USD Accumulation
    iShares S&P 500 Swap UCITS ETF USD (Acc)
    High correlation

The two ETFs in the portfolio are highly correlated, meaning they tend to move together. High correlation limits diversification benefits, especially during market downturns. Diversification aims to reduce risk by having assets that behave differently. To improve diversification, consider adding assets with lower correlation to the current holdings, such as international stocks or bonds, which can help stabilize returns and reduce overall portfolio 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 composition could be optimized using the Efficient Frontier concept, which seeks the best risk-return ratio. However, the high correlation between the two ETFs limits diversification benefits. Before optimizing, consider diversifying by reducing overlap and adding less correlated assets. This adjustment could enhance the risk-return profile, aligning more closely with balanced portfolio strategies and potentially improving long-term performance while maintaining desired risk levels.

Ongoing product costs Info

  • iShares S&P 500 Swap UCITS ETF USD (Acc) 0.07%
  • Vanguard FTSE All-World UCITS ETF USD Accumulation 0.22%
  • Weighted costs total (per year) 0.19%

The portfolio's Total Expense Ratio (TER) stands at 0.19%, which is relatively low and beneficial for long-term returns. Lower costs mean more of your money stays invested, compounding over time. This cost efficiency aligns well with best practices, ensuring that expenses don't erode returns. Regularly reviewing and comparing TERs can help maintain cost-effectiveness. Staying informed about any changes in fees ensures that the portfolio remains aligned with cost-conscious investment strategies.

What next?

Create your own report?

Analyze your portfolio

Join our community!

Join Discord

The information provided on this platform is for informational purposes only and should not be considered as financial or investment advice. Insightfolio does not provide investment advice, personalized recommendations, or guidance regarding the purchase, holding, or sale of financial assets. The tools and content are intended for educational purposes only and are not tailored to individual circumstances, financial needs, or objectives.

Insightfolio assumes no liability for the accuracy, completeness, or reliability of the information presented. Users are solely responsible for verifying the information and making independent decisions based on their own research and careful consideration. Use of the platform should not replace consultation with qualified financial professionals.

Investments involve risks. Users should be aware that the value of investments may fluctuate and that past performance is not an indicator of future results. Investment decisions should be based on personal financial goals, risk tolerance, and independent evaluation of relevant information.

Insightfolio does not endorse or guarantee the suitability of any particular financial product, security, or strategy. Any projections, forecasts, or hypothetical scenarios presented on the platform are for illustrative purposes only and are not guarantees of future outcomes.

By accessing the services, information, or content offered by Insightfolio, users acknowledge and agree to these terms of the disclaimer. If you do not agree to these terms, please do not use our platform.

Instrument logos provided by Elbstream.

Help us improve Insightfolio

Your feedback makes a difference! Share your thoughts in our quick survey. Take the survey