A balanced portfolio with a strong tech focus and global equity exposure

Report created on Dec 18, 2024

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 heavily weighted towards global equities, with 90% in the Vanguard FTSE All-World UCITS ETF and 10% in the Xtrackers MSCI World Information Technology UCITS ETF. This composition suggests a focus on capturing global market gains while maintaining a significant emphasis on the technology sector. The portfolio is classified as balanced, indicating a moderate approach to risk and return. While it is broadly diversified across global equities, the heavy weighting in a single ETF could limit exposure to specific market segments, suggesting room for further diversification.

Growth Info

Historically, the portfolio has shown robust performance, with a Compound Annual Growth Rate (CAGR) of 14.13%. This indicates strong returns over time, although it's important to note the maximum drawdown of -33.19%, which reflects potential volatility during market downturns. Such performance metrics highlight the potential for significant growth, albeit with periods of substantial risk. Investors should consider their ability to withstand such drawdowns when evaluating the portfolio's suitability for their financial goals.

Projection Info

Forward projections using Monte Carlo simulations, which employ historical data to estimate future outcomes, suggest a wide range of potential returns. The simulations indicate a 5th percentile return of 210.95% and a median return of 946.06%, with 999 out of 1,000 simulations showing positive returns. While these projections are promising, they rely on past performance and assumptions that may not hold in the future. Investors should use these projections as one of many tools in decision-making, keeping in mind the inherent uncertainties.

Asset classes Info

  • Stocks
    100%

The portfolio is predominantly invested in stocks, accounting for nearly 100% of the allocation. This concentration in a single asset class can provide high growth potential, but also exposes the portfolio to significant market risk. Diversifying across additional asset classes, such as bonds or commodities, could help mitigate risk and provide more stability. A balanced approach typically includes a mix of asset classes to smooth out returns and reduce the impact of market volatility.

Sectors Info

  • Technology
    33%
  • Financials
    15%
  • Health Care
    9%
  • Consumer Discretionary
    9%
  • Industrials
    9%
  • Telecommunications
    7%
  • Consumer Staples
    5%
  • Energy
    4%
  • Basic Materials
    3%
  • Utilities
    3%
  • Real Estate
    2%

Sector analysis reveals a strong concentration in technology, which comprises over 33% of the portfolio. While this can be advantageous during periods of tech sector growth, it also increases vulnerability to sector-specific downturns. Other sectors like financial services, healthcare, and consumer cyclicals provide some diversification, but the heavy tech focus may not align with all investors' risk profiles. Balancing sector exposure could enhance stability and reduce reliance on the performance of a single sector.

Regions Info

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

Geographically, the portfolio is heavily weighted towards North America, which makes up over 68% of the allocation. This concentration suggests a reliance on the performance of North American markets, potentially exposing the portfolio to regional risks. While there is some exposure to Europe, Japan, and emerging markets, increasing geographic diversification could reduce risk and enhance opportunities for growth in different economic environments. A more balanced geographic allocation may lead to more stable returns.

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 can be optimized using the Efficient Frontier, which seeks to maximize returns for a given level of risk by adjusting the allocation between existing assets. By analyzing the risk-return trade-offs, investors can identify the most efficient allocation. This doesn't necessarily mean adding new assets, but rather fine-tuning the current holdings to achieve the best possible balance. Regular reviews and adjustments can help maintain an optimal risk-return profile over time.

Ongoing product costs Info

  • Vanguard FTSE All-World UCITS ETF USD Accumulation 0.22%
  • Xtrackers MSCI World Information Technology UCITS ETF 1C 0.25%
  • Weighted costs total (per year) 0.22%

With a Total Expense Ratio (TER) of 0.22%, the portfolio is relatively cost-efficient. Low costs are crucial as they can significantly impact long-term returns due to the compounding effect of fees. Investors should regularly review and compare costs with similar investment options to ensure competitiveness. Reducing costs where possible can enhance net returns and contribute to achieving financial goals more efficiently.

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