A balanced portfolio with tech concentration and strong historical performance
Report created on Jan 31, 2025Risk profile
4/7
Diversification profile
4/5
Positions
-
EQ Invesco EQQQ NASDAQ-100 UCITS ETF Acc
EQQB - IE00BFZXGZ54 50.00% -
VG Vanguard FTSE All-World UCITS ETF
VGWL - IE00B3RBWM25 50.00%
This portfolio is composed of two ETFs, each occupying 50% of the allocation. The Invesco EQQQ NASDAQ-100 ETF focuses on large-cap tech stocks, while the Vanguard FTSE All-World ETF provides global exposure. This setup offers a mix of growth-oriented and diversified global investments. The portfolio's structure aligns with a balanced profile, but it leans heavily towards technology. This composition may outperform during tech booms but could underperform in tech downturns. Consider diversifying further to reduce sector-specific risk, especially if tech volatility is a concern.
Growth
Historically, this portfolio has shown a robust Compound Annual Growth Rate (CAGR) of 15.61%, indicating strong performance. This suggests that a hypothetical initial investment has grown significantly over time. However, the maximum drawdown of -19.07% highlights potential volatility. Comparing this to benchmarks, the portfolio has performed well, likely due to its tech-heavy nature. While past performance is promising, remember that it doesn't guarantee future results. It's wise to prepare for similar drawdowns by ensuring your risk tolerance aligns with potential volatility.
Projection
The Monte Carlo simulation, with 1,000 iterations, projects a wide range of potential outcomes for this portfolio. It uses historical data to estimate future performance, with the 50th percentile showing a 654.5% increase. While the simulation indicates a high probability of positive returns, it's essential to note that these projections are not certainties. They provide a range of possible scenarios based on past data, which may not account for future market shifts. Regularly reviewing projections can help you stay aligned with your financial goals.
Asset classes
- Stocks 100%
This portfolio is entirely composed of stocks, which can offer substantial growth potential. However, this lack of diversification across asset classes might increase risk, as stocks can be volatile. Compared to a more diversified benchmark, this portfolio might experience greater fluctuations. Including other asset classes, like bonds or real estate, could provide stability during market downturns. Diversifying across asset classes can help balance risk and return, aligning more closely with a balanced investment strategy.
Sectors
- Technology 39%
- Consumer Discretionary 13%
- Telecommunications 12%
- Financials 9%
- Health Care 8%
- Industrials 7%
- Consumer Staples 6%
- Basic Materials 2%
- Energy 2%
- Utilities 2%
- Real Estate 1%
With 39% allocated to technology, this portfolio is heavily weighted towards this sector. Other notable sectors include consumer cyclicals and communication services. This concentration in technology can lead to higher volatility, especially during periods of economic uncertainty. Compared to common benchmarks, the tech allocation is significantly higher, which can be advantageous in tech-driven markets but risky during downturns. To mitigate sector-specific risks, consider diversifying into less represented sectors, which could enhance stability and reduce volatility.
Regions
- North America 82%
- Europe Developed 8%
- Asia Emerging 3%
- Japan 3%
- Asia Developed 2%
- Australasia 1%
- Latin America 1%
- Africa/Middle East 1%
The portfolio's geographic exposure is predominantly in North America, accounting for 82% of the allocation. This concentration could lead to regional risk, as it heavily relies on North American market performance. Compared to global benchmarks, this allocation lacks diversification, particularly in emerging markets. Expanding geographic exposure could mitigate regional risks and capture growth opportunities in diverse markets. Consider increasing allocations to underrepresented regions to enhance global diversification and reduce dependency on the North American market.
Market capitalization
- Mega-cap 50%
- Large-cap 36%
- Mid-cap 14%
The portfolio is primarily invested in mega-cap stocks, which make up 50% of the allocation, followed by big and medium caps. This focus on larger companies can provide stability and lower volatility, as these firms are generally well-established. However, it may limit exposure to the growth potential of smaller companies. Compared to a more balanced market-cap benchmark, this allocation is skewed towards larger firms. Consider incorporating small-cap stocks to capture potential growth opportunities, which can enhance diversification and improve long-term 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 could be optimized using the Efficient Frontier, which aims to find the best risk-return ratio for the current assets. This involves adjusting allocations to maximize returns for a given level of risk. While the portfolio is well-structured, small tweaks in allocation could improve efficiency. This doesn't necessarily mean adding new assets but rather rebalancing existing ones. Consider consulting with a financial advisor to explore potential optimization strategies and ensure the portfolio aligns with your risk tolerance and investment goals.
Dividends
- Vanguard FTSE All-World UCITS ETF 0.90%
- Weighted yield (per year) 0.45%
The portfolio's dividend yield is relatively low at 0.45%, largely due to the focus on growth-oriented ETFs. Dividends can provide a steady income stream and contribute to total returns, especially in volatile markets. While growth stocks may offer higher capital appreciation, they typically pay lower dividends. If generating income is a priority, consider incorporating higher-yielding assets. Balancing growth and income can enhance portfolio stability and provide a cushion during market downturns.
Ongoing product costs
- Invesco EQQQ NASDAQ-100 UCITS ETF Acc 0.35%
- Vanguard FTSE All-World UCITS ETF 0.22%
- Weighted costs total (per year) 0.28%
The portfolio's Total Expense Ratio (TER) is 0.28%, which is relatively low and supports better long-term performance by minimizing costs. Lower fees mean more of your returns are retained, compounding over time. Compared to similar portfolios, this cost structure is competitive. Efficient cost management is crucial for maximizing returns, especially over long investment horizons. Regularly reviewing and optimizing costs can further enhance portfolio efficiency, ensuring you retain the maximum possible returns from your investments.
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