A balanced portfolio with strong global equity focus and moderate emerging markets exposure

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

What type of investor this portfolio is suitable for

Balanced Investors

This portfolio suits an investor seeking balanced growth with moderate risk tolerance and a long-term horizon. It prioritizes steady returns while maintaining exposure to global equities, making it ideal for individuals looking to build wealth over time. Such investors are comfortable with market fluctuations and are focused on capital appreciation rather than immediate income. The combination of developed and emerging market exposure offers a blend of stability and growth potential, aligning with goals of wealth accumulation and diversification.

Positions

  • iShares Core MSCI World UCITS ETF USD (Acc)
    EUNL - IE00B4L5Y983
    70.00%
  • iShares MSCI EM UCITS ETF USD (Acc)
    EUNM - IE00B4L5YC18
    30.00%

The portfolio is predominantly composed of global equities, with 70% allocated to the iShares Core MSCI World UCITS ETF and 30% to the iShares MSCI EM UCITS ETF. This structure emphasizes broad exposure to developed markets, while maintaining a significant stake in emerging markets. Such a composition provides a balance between stability and growth potential. For investors, this means a focus on capital appreciation with some exposure to higher-risk, higher-reward markets. To enhance diversification, consider incorporating additional asset classes like bonds or alternative investments, which could offer different risk-return profiles.

Growth Info

Historically, the portfolio has delivered a compound annual growth rate (CAGR) of 11.06%, with a maximum drawdown of -32.98%. This indicates strong performance over time, but also highlights potential volatility during market downturns. The concentration in equities contributes to this volatility. Understanding past performance helps set realistic expectations for future returns, although it's crucial to remember that past performance is not indicative of future results. To mitigate potential drawdowns, consider strategies like dollar-cost averaging or rebalancing periodically to align with risk tolerance.

Projection Info

Using Monte Carlo simulation, the portfolio's future performance was projected with 1,000 simulations. The median outcome suggests a potential return of 237.24%, while the best-case scenario shows a return of 359.54%. Monte Carlo simulations use historical data to estimate a range of possible outcomes, providing insight into potential risks and returns. However, these projections are not guarantees, as they depend on assumptions and past data, which may not repeat. Regularly reviewing and adjusting the portfolio based on changing market conditions can help manage expectations and align with long-term goals.

Asset classes Info

  • Stocks
    100%
  • Cash
    0%
  • Other
    0%
  • Bonds
    0%

The portfolio is heavily weighted towards equities, with over 99% in stocks, offering limited diversification across asset classes. This concentration increases exposure to equity market risks but can potentially yield higher returns. A more balanced allocation could include bonds or other asset classes to reduce volatility and provide stability during market downturns. Diversifying across different asset classes can enhance risk management, offering a cushion against market fluctuations. Consider exploring fixed income or alternative investments to achieve a more balanced risk-return profile.

Sectors Info

  • Technology
    26%
  • Financials
    18%
  • Consumer Discretionary
    11%
  • Industrials
    9%
  • Health Care
    9%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    4%
  • Utilities
    3%
  • Real Estate
    2%

Sector allocation is diverse, with significant exposure to Technology (25.9%), Financial Services (17.9%), and Consumer Cyclicals (11.1%). This diversification across sectors can help mitigate sector-specific risks, although it also reflects a notable concentration in technology. Sectoral balance is crucial for managing risk, as different sectors respond differently to economic cycles. To reduce sector concentration risk, consider adjusting allocations to achieve a more even distribution across sectors. This can enhance the portfolio's resilience against sector-specific downturns.

Regions Info

  • North America
    54%
  • Asia Emerging
    15%
  • Europe Developed
    11%
  • Asia Developed
    9%
  • Japan
    4%
  • Africa/Middle East
    3%
  • Latin America
    2%
  • Australasia
    1%
  • Europe Emerging
    1%

Geographic exposure is primarily concentrated in North America (53.8%), followed by Asia Emerging (15.2%) and Europe Developed (10.7%). This allocation provides substantial exposure to developed markets, while also capturing growth opportunities in emerging regions. Geographic diversification is important for managing geopolitical and economic risks that can affect specific regions. To further diversify, consider increasing exposure to underrepresented regions. This can enhance the portfolio's ability to withstand regional economic shocks and capitalize on global growth opportunities.

Ongoing product costs Info

  • iShares Core MSCI World UCITS ETF USD (Acc) 0.20%
  • iShares MSCI EM UCITS ETF USD (Acc) 0.18%
  • Weighted costs total (per year) 0.19%

The portfolio's total expense ratio (TER) is 0.19%, which is relatively low and beneficial for long-term returns. Keeping costs low is crucial, as fees can significantly erode investment gains over time. Low-cost ETFs like those in the portfolio help maximize net returns by minimizing expenses. To further optimize costs, regularly review and compare fees with similar investment options. Ensuring cost efficiency supports better compounding of returns over the investment horizon.

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.

The portfolio can be optimized using the Efficient Frontier to achieve a better risk-return ratio. The analysis suggests a potential improvement in expected return to 12.81% with the same risk level. The Efficient Frontier represents the set of optimal portfolios offering the highest expected return for a given level of risk. By reallocating existing assets, investors can potentially enhance returns without increasing risk. Regularly reassessing the portfolio's position on the Efficient Frontier can ensure alignment with financial objectives and risk tolerance.

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