A broadly diversified portfolio with strong global exposure and a focus on technology sectors

Report created on Dec 23, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio is heavily weighted towards equity ETFs, with a significant focus on the Vanguard S&P 500 and FTSE All-World ETFs, each comprising 31% of the total. This aligns with common benchmark compositions for balanced portfolios, which often emphasize large-cap equities. The inclusion of thematic ETFs like those focused on AI and blockchain adds a layer of innovation. While this composition is well-balanced for growth, it may benefit from further diversification into other asset classes such as bonds or real estate to reduce volatility and enhance stability during market downturns.

Growth Info

The portfolio's historical performance is impressive, with a Compound Annual Growth Rate (CAGR) of 15.91%, indicating strong past growth. This performance is well above typical benchmark returns, reflecting the portfolio's equity-heavy composition. However, it's important to remember that past performance doesn't guarantee future results. The maximum drawdown of -8.9% suggests moderate risk, which is reasonable for a balanced profile. To maintain this performance, consider regular rebalancing to ensure the portfolio remains aligned with your risk tolerance and investment goals.

Projection Info

The Monte Carlo simulation projects a wide range of potential outcomes, with a median return of 667.74% and an annualized return of 20.69%. Monte Carlo simulations use historical data to predict future performance, but they can't account for unforeseen market events. While the projections are optimistic, it's crucial to remain cautious and not rely solely on these figures. Regularly review and adjust your portfolio as needed to adapt to changing market conditions and ensure it continues to meet your financial objectives.

Asset classes Info

  • Stocks
    100%

The portfolio is almost entirely composed of stocks, with 99.97% allocated to equities. This heavy equity weighting can drive significant growth but also introduces higher volatility. Compared to benchmarks, which often include a mix of asset classes, this portfolio may benefit from incorporating other asset types like bonds or cash equivalents to improve diversification and reduce risk. Balancing different asset classes can help cushion the impact of market fluctuations and provide more consistent returns over time.

Sectors Info

  • Technology
    34%
  • Financials
    17%
  • Consumer Discretionary
    10%
  • Health Care
    8%
  • Telecommunications
    8%
  • Industrials
    8%
  • Consumer Staples
    5%
  • Energy
    3%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    2%

The portfolio is heavily concentrated in the technology sector, comprising over 34% of the total allocation. While this sector has been a high performer, it can be volatile, especially during periods of rising interest rates. The balance of sectors, including financial services and consumer cyclicals, helps mitigate some risk. However, consider diversifying further into underrepresented sectors like real estate or utilities, which can provide stability and income. This broader sector diversification can enhance the portfolio's resilience against sector-specific downturns.

Regions Info

  • North America
    72%
  • Asia Emerging
    8%
  • Europe Developed
    7%
  • Asia Developed
    5%
  • Japan
    3%
  • Africa/Middle East
    2%
  • Latin America
    1%
  • Australasia
    1%

The portfolio's geographic allocation is predominantly focused on North America, which accounts for over 72% of the total. This heavy concentration can limit exposure to growth opportunities in other regions. While North American markets are stable, consider increasing allocation to emerging markets or underrepresented regions like Europe or Latin America. Diversifying geographically can help capture growth in developing economies and reduce reliance on any single market, thereby enhancing overall portfolio resilience.

Redundant positions Info

  • Vanguard FTSE All-World UCITS
    Vanguard FTSE Developed World UCITS ETF USD Accumulation
    Vanguard S&P 500 UCITS ETF
    High correlation

The portfolio contains highly correlated assets, particularly among the Vanguard ETFs, which can limit diversification benefits. High correlation means these assets tend to move in the same direction, reducing the portfolio's ability to mitigate risk during market downturns. To enhance diversification, consider replacing some of these overlapping assets with others that have lower correlation. This approach can help balance risk and improve the portfolio's overall performance by ensuring that not all assets are affected by the same market conditions.

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 current portfolio could be optimized using the Efficient Frontier, which suggests the best possible risk-return ratio for a given set of assets. However, before optimization, it's crucial to address the high correlation among certain assets, as this limits diversification benefits. By adjusting the allocation to reduce overlap and enhance diversification, you can potentially achieve a more efficient portfolio. Remember, efficiency here refers to maximizing returns for a given level of risk, not necessarily achieving broader diversification or other specific goals.

Dividends Info

  • Vanguard S&P 500 UCITS ETF 0.60%
  • Vanguard FTSE All-World UCITS 1.10%
  • Weighted yield (per year) 0.53%

The portfolio's overall dividend yield is relatively low at 0.53%, reflecting its focus on growth-oriented ETFs. While dividends can provide a steady income stream, they are less critical for investors prioritizing capital appreciation. However, if income generation is a goal, consider incorporating higher-yielding assets or funds into the portfolio. Balancing growth and income can help achieve a more stable return profile, especially during periods of market volatility or economic downturns.

Ongoing product costs Info

  • WisdomTree Artificial Intelligence UCITS ETF - USD Acc 0.40%
  • Vanguard S&P 500 UCITS ETF 0.07%
  • Vanguard FTSE All-World UCITS 0.22%
  • Weighted costs total (per year) 0.14%

The total expense ratio (TER) of the portfolio is 0.14%, which is impressively low. This cost efficiency supports better long-term performance, as lower fees mean more of your returns are retained. Compared to industry averages, this TER is competitive, ensuring that costs don't erode returns significantly. However, always remain vigilant about any changes in fees and consider reviewing the cost structure periodically to ensure it remains aligned with your investment strategy and objectives.

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