A conservative portfolio with a focus on low risk and limited diversification opportunities
Report created on Dec 19, 2024Risk profile
2/7
Diversification profile
1/5
Positions
-
XE Xtrackers II EUR Overnight Rate Swap UCITS ETF 1C
XEON - LU0290358497 36.69% -
4G Xetra-Gold
4GLD - DE000A0S9GB0 33.56% -
I5 iShares S&P 500 Swap UCITS ETF USD (Acc)
I500 - IE00BMTX1Y45 29.75%
The portfolio is predominantly composed of ETFs, with a notable concentration in the Xtrackers II EUR Overnight Rate Swap UCITS ETF, which makes up 36.69% of the portfolio. This is followed closely by Xetra-Gold at 33.56% and iShares S&P 500 Swap UCITS ETF USD (Acc) at 29.75%. The heavy allocation towards these three ETFs indicates a focus on stability and conservative growth. Understanding the composition is crucial as it highlights the portfolio's reliance on a few key assets, which may affect overall performance and risk. Diversifying further could potentially enhance returns and reduce risk exposure.
Growth
Historically, the portfolio has shown a compound annual growth rate (CAGR) of 9.98%, with a maximum drawdown of -6.52%. This suggests a relatively stable performance with limited downside risk, which aligns with the conservative risk classification. While past performance can provide insights, it's important to remember that it doesn't guarantee future results. The limited number of days that account for 90% of returns indicates that the portfolio's gains are concentrated, suggesting that timing and market conditions play a significant role in its success.
Projection
Forward projections using Monte Carlo simulations, which use historical data to predict future outcomes, show a wide range of potential returns. The 5th percentile projects a modest 100.59% return, while the 67th percentile forecasts a more optimistic 413.49%. All simulations indicate positive returns, with an average annualized return of 11.19%. While these projections provide a useful framework for understanding potential outcomes, they are based on historical data and assumptions that may not hold in the future. Investors should use these insights as one of many tools in their decision-making process.
Asset classes
- Bonds 36%
- Stocks 30%
- Other 2%
The portfolio is primarily divided between bonds (35.75%) and stocks (29.75%), with a small allocation to other asset classes. This limited diversification across asset classes suggests a focus on stability rather than aggressive growth. Bonds typically provide income and reduce volatility, while stocks offer potential for capital appreciation. A more balanced allocation could enhance diversification, potentially improving risk-adjusted returns. Investors might consider increasing exposure to other asset classes, such as real estate or commodities, to mitigate risks associated with market fluctuations.
Sectors
- Technology 10%
- Financials 4%
- Consumer Discretionary 3%
- Health Care 3%
- Telecommunications 3%
- Industrials 2%
- Consumer Staples 2%
- Energy 1%
- Utilities 1%
- Real Estate 1%
- Basic Materials 1%
The sectoral allocation is concentrated, with technology leading at 9.71%, followed by financial services (4%) and consumer cyclicals (3.25%). The portfolio shows minimal exposure to other sectors, which could limit its ability to capitalize on sector-specific growth opportunities. Sector diversification is essential to reduce the impact of sector-specific downturns. Investors might consider reallocating to achieve a more balanced sectoral distribution, which could enhance resilience against economic shifts and sector-specific risks.
Regions
- North America 30%
The portfolio's geographic exposure is heavily weighted towards North America, at 29.58%, with minimal allocations to Europe and Asia. This concentration could expose the portfolio to region-specific risks, such as economic downturns or political instability in North America. Geographic diversification can mitigate these risks by spreading investments across different regions, potentially capturing growth in emerging markets. Investors might consider increasing exposure to international markets to enhance diversification and reduce reliance on a single region's economic 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 could benefit from optimization using the Efficient Frontier, which aims to achieve the best possible risk-return ratio given the current assets. This involves adjusting the allocation between existing assets to maximize returns for a given level of risk or minimize risk for a given level of return. While optimization can enhance efficiency, it does not guarantee diversification or alignment with specific investment goals. Investors should consider their risk tolerance and long-term objectives when making allocation changes.
Ongoing product costs
- iShares S&P 500 Swap UCITS ETF USD (Acc) 0.07%
- Xtrackers II EUR Overnight Rate Swap UCITS ETF 1C 0.10%
- Weighted costs total (per year) 0.06%
With a total expense ratio (TER) of 0.06%, the portfolio is cost-effective, which is beneficial for long-term returns. Lower costs mean more of the portfolio's returns are retained, enhancing compounding over time. However, investors should remain vigilant about any changes in fees or additional costs that could erode returns. Continually reviewing and comparing the expense ratios of existing and potential investments can help maintain a cost-efficient portfolio.
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