A tech-focused portfolio with strong growth potential but high geographic concentration

Report created on Jan 12, 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 heavily weighted towards technology-focused ETFs, with a significant 50% allocation in the Vanguard FTSE All-World UCITS ETF. The remaining 50% is split among three other tech-centric ETFs. Compared to a typical balanced portfolio with a mix of stocks, bonds, and other assets, this portfolio leans heavily towards equities, particularly in the technology sector. While this composition offers significant growth potential, it may also introduce higher volatility. To achieve a more balanced risk profile, consider incorporating additional asset classes such as bonds or real estate, which can provide stability during market fluctuations.

Growth Info

The portfolio's historical performance, with a Compound Annual Growth Rate (CAGR) of 17.97%, indicates strong past returns. However, the maximum drawdown of -24.62% highlights potential volatility. A drawdown represents the peak-to-trough decline during a specific period, showing how much the portfolio's value could fall. This performance is impressive compared to typical benchmarks, but it's important to remember that past performance doesn't guarantee future results. To mitigate potential risks, consider regularly reviewing and rebalancing the portfolio to maintain alignment with your risk tolerance and investment goals.

Projection Info

Forward projections using Monte Carlo simulations suggest an annualized return of 22.54%, with a high likelihood of positive outcomes. Monte Carlo simulations use historical data to model a range of possible future outcomes, providing insights into potential risks and rewards. However, these projections are based on historical trends and assumptions, which may not fully capture future market conditions. To enhance the reliability of these projections, consider diversifying across more asset classes and regions, which can help manage risks and improve the portfolio's resilience against unforeseen market events.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted towards stocks, with 99.97% of assets in equities, leaving minimal exposure to other asset classes. This concentration can lead to higher volatility, as equities are generally more sensitive to market fluctuations compared to bonds or cash. A typical balanced portfolio includes a mix of stocks, bonds, and other assets to provide diversification and stability. To improve diversification and reduce risk, consider incorporating fixed-income securities or alternative investments, which can help cushion the impact of market downturns and provide more consistent returns over time.

Sectors Info

  • Technology
    57%
  • Financials
    9%
  • Telecommunications
    7%
  • Consumer Discretionary
    6%
  • Health Care
    5%
  • Industrials
    5%
  • Consumer Staples
    3%
  • Energy
    2%
  • Basic Materials
    2%
  • Utilities
    1%
  • Real Estate
    1%

With 57.5% of the portfolio allocated to technology, there's a significant concentration in this sector. While technology offers strong growth potential, it can also be volatile, especially during economic shifts or regulatory changes. Other sectors like financial services and healthcare have much smaller allocations, which may limit diversification. To mitigate sector-specific risks, consider diversifying into additional sectors such as utilities or consumer staples, which tend to be more stable. This can help balance the portfolio and reduce the impact of sector-specific downturns, while still allowing for growth opportunities.

Regions Info

  • North America
    76%
  • Europe Developed
    11%
  • Asia Developed
    5%
  • Japan
    4%
  • Asia Emerging
    3%
  • Australasia
    1%
  • Africa/Middle East
    1%

The portfolio's geographic exposure is heavily skewed towards North America, which accounts for 76% of the allocation. While North American markets have historically performed well, this concentration may expose the portfolio to regional risks, such as economic downturns or policy changes. A more diversified geographic allocation could include greater exposure to Europe, Asia, or emerging markets, which can provide additional growth opportunities and reduce regional risk. This approach can help balance the portfolio and enhance its resilience against potential global market fluctuations.

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 allocation may not fully align with the Efficient Frontier, which represents the optimal risk-return balance. The Efficient Frontier is a concept in modern portfolio theory that suggests the best possible return for a given level of risk. By adjusting the allocation among existing assets, it may be possible to achieve a more efficient risk-return profile. Consider using portfolio optimization tools to explore potential adjustments, such as increasing diversification across sectors and regions. This can help enhance returns while managing risk more effectively.

Ongoing product costs Info

  • VanEck Semiconductor UCITS ETF 0.35%
  • Vanguard FTSE All-World UCITS ETF USD Accumulation 0.22%
  • Xtrackers Artificial Intelligence &Big Data UCITS ETF 1C 0.35%
  • Xtrackers MSCI World Information Technology UCITS ETF 1C 0.25%
  • Weighted costs total (per year) 0.27%

The portfolio's total expense ratio (TER) of 0.27% is relatively low, which is beneficial for long-term performance. Lower costs mean more of your investment returns stay in your pocket, compounding over time. Compared to actively managed funds, which often have higher fees, this portfolio's costs are well-optimized. To maintain these low costs, regularly review and compare the expense ratios of your holdings with similar options. If lower-cost alternatives are available, consider switching to further reduce expenses and enhance overall returns.

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