A balanced portfolio with strong US focus and significant tech sector exposure

Report created on Jan 7, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio is composed of three ETFs with a heavy focus on equities, leading to a 99.99% allocation in stocks. The Vanguard S&P 500 ETF holds the largest share at 60%, indicating a strong emphasis on large-cap US equities. This composition aligns well with a balanced risk profile, providing growth potential while maintaining some level of diversification. However, the reliance on equities may expose the portfolio to market volatility. Consider introducing other asset classes, such as bonds or real estate, to diversify risk and potentially enhance stability.

Growth Info

The historical performance of the portfolio shows a Compound Annual Growth Rate (CAGR) of 18.36%, which is impressive. This indicates that the portfolio has grown significantly over the years. However, the maximum drawdown of -22.4% suggests vulnerability during market downturns. Comparing this to a benchmark like the S&P 500, which has a similar risk profile, shows that the portfolio has performed well. To maintain strong performance, consider strategies to mitigate potential drawdowns, such as diversifying into less volatile assets.

Projection Info

Monte Carlo simulations, which use historical data to predict future outcomes, suggest a wide range of potential returns for this portfolio. The median outcome projects an 868.76% return, but there is a 5% chance of achieving only 180% growth. While these projections offer valuable insights, remember that they are based on past data and are not guarantees. Regularly reviewing and adjusting the portfolio in response to changing market conditions can help manage risks and seize opportunities for growth.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted towards equities, with almost no allocation to other asset classes like bonds or cash. This concentration in stocks can drive growth, but it also increases exposure to market volatility. Compared to diversified benchmarks, this lack of asset class diversity might limit the portfolio's ability to buffer against downturns. To enhance diversification, consider adding fixed-income assets or commodities, which could provide more stability and reduce overall risk.

Sectors Info

  • Technology
    42%
  • Financials
    12%
  • Health Care
    10%
  • Industrials
    8%
  • Consumer Discretionary
    8%
  • Telecommunications
    6%
  • Consumer Staples
    5%
  • Energy
    3%
  • Utilities
    2%
  • Basic Materials
    2%
  • Real Estate
    2%

The portfolio has a significant concentration in the technology sector, making up over 41% of the allocation. This sector's growth potential is high, but it also introduces volatility, particularly during periods of interest rate changes. The remaining allocation is spread across various sectors, with financial services and healthcare being notable. This sectoral distribution provides some diversification, but the heavy tech focus could lead to increased risk. Balancing sector exposure by considering underrepresented areas might reduce volatility.

Regions Info

  • North America
    75%
  • Europe Developed
    22%
  • Asia Developed
    2%

Geographically, the portfolio is predominantly exposed to North America, with 75% of assets allocated there. This focus on the US market may limit diversification benefits and increase vulnerability to regional economic shifts. The remaining assets are primarily in developed Europe, with minimal exposure to Asia and emerging markets. While this allocation aligns with many global benchmarks, diversifying into other regions can enhance resilience and tap into growth opportunities in emerging markets.

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 aims to achieve the best possible risk-return ratio. This involves adjusting the allocation of existing assets to find an optimal balance between risk and return. While this approach may not necessarily improve diversification, it can enhance the portfolio's efficiency. Regular reviews and adjustments based on market conditions and personal goals can help maintain this optimization.

Ongoing product costs Info

  • Vanguard FTSE Developed Europe ex UK UCITS 0.10%
  • Vanguard S&P 500 UCITS Acc 0.07%
  • VanEck Semiconductor UCITS ETF 0.35%
  • Weighted costs total (per year) 0.13%

The portfolio's total expense ratio (TER) is 0.13%, which is relatively low. This cost efficiency supports better long-term performance by minimizing the drag on returns. Low fees are a positive aspect of the portfolio, allowing more of the returns to be retained by the investor. Continuing to monitor and seek out cost-effective investment options can further enhance the portfolio's growth potential.

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