A balanced ETF portfolio with a focus on US and European markets

Report created on Mar 29, 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 entirely of ETFs, with a significant allocation to equity markets. The iShares Core S&P 500 and Xtrackers Stoxx Europe 600 each hold 30% of the portfolio, providing broad exposure to US and European equities. The SPDR MSCI Europe Financials and iShares NASDAQ 100 ETFs, each at 20%, add focused exposure to financials and technology. Compared to a typical balanced portfolio, this one leans heavily on equities, which could offer higher returns but also increased volatility. Consider diversifying with different asset classes to balance risk and return.

Growth Info

Historically, the portfolio has performed well, with a CAGR of 11.29%. This indicates a strong past performance relative to many benchmarks. However, it experienced a maximum drawdown of -33.75%, showing vulnerability during market downturns. While past performance is not indicative of future results, it underscores the portfolio's potential for significant gains and losses. Diversification and risk management strategies could help mitigate potential downside risks in future market downturns.

Projection Info

The Monte Carlo simulation, a tool that uses historical data to forecast potential future outcomes, shows promising projections. With 1,000 simulations, the portfolio's annualized return is projected at 12.57%. However, the 5th percentile outcome of 35.5% suggests potential for downside risk. While simulations provide valuable insights, they rely on historical data and assumptions that may not hold true. It's vital to regularly review and adjust the portfolio to align with changing market conditions and personal investment goals.

Asset classes Info

  • Stocks
    70%

The portfolio's allocation is heavily skewed toward stocks, with 70% dedicated to equity ETFs. While this offers growth potential, it also increases exposure to market volatility. A more balanced approach might include bonds or other asset classes to provide stability and reduce risk. Comparing this to typical balanced portfolios, which often include a mix of stocks and bonds, highlights the need for diversification across asset classes to achieve a more stable risk-return profile.

Sectors Info

  • Financials
    24%
  • Technology
    20%
  • Telecommunications
    6%
  • Consumer Discretionary
    6%
  • Health Care
    4%
  • Industrials
    3%
  • Consumer Staples
    3%
  • Energy
    1%
  • Utilities
    1%
  • Basic Materials
    1%
  • Real Estate
    1%

Sector-wise, the portfolio is concentrated in financial services and technology, comprising 44% of the total allocation. This concentration can lead to increased volatility, especially during market shifts affecting these sectors. While technology can drive growth, it may also increase risk during economic downturns. Diversifying across more sectors could improve stability and reduce sector-specific risks. Consider evaluating current sector trends and adjusting allocations to align with long-term market outlooks.

Regions Info

  • North America
    49%
  • Europe Developed
    20%

Geographically, the portfolio is heavily weighted towards North America, with a 49% allocation, and Europe Developed at 20%. This provides strong exposure to established markets but limits diversification benefits from emerging markets. While developed markets offer stability, emerging markets can provide growth opportunities. Consider adjusting geographic exposure to include a broader range of regions, potentially improving diversification and capturing growth in less mature markets.

Market capitalization Info

  • Mega-cap
    35%
  • Large-cap
    25%
  • Mid-cap
    10%

The portfolio's market capitalization is concentrated in mega and big-cap stocks, comprising 60% of the allocation. This focus on large companies can offer stability and lower volatility. However, it may limit exposure to the potentially higher growth of mid and small-cap stocks. A more diversified approach across different market capitalizations could enhance growth potential and reduce reliance on large-cap performance. Consider incorporating mid and small-cap stocks to balance risk and reward.

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 could potentially be optimized using the Efficient Frontier, a concept that identifies the best possible risk-return ratio. By adjusting allocations among existing assets, the portfolio could achieve a more efficient balance of risk and return. It's important to note that this optimization is based solely on current assets and does not account for diversification across new asset classes. Regularly reassessing allocations can ensure alignment with risk tolerance and investment goals.

Ongoing product costs Info

  • SPDR® MSCI Europe Financials UCITS ETF 0.18%
  • iShares Core S&P 500 UCITS ETF USD (Acc) 0.12%
  • iShares NASDAQ 100 UCITS ETF USD (Acc) 0.36%
  • Weighted costs total (per year) 0.14%

The portfolio's total expense ratio (TER) is relatively low at 0.14%, which is beneficial for long-term performance. Lower costs mean more of the returns are retained by the investor, enhancing compounding over time. Compared to typical ETF portfolios, this cost structure is competitive and supports better net returns. Continue monitoring expense ratios and consider reallocating to lower-cost options if available, ensuring the portfolio remains cost-efficient.

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