A balanced portfolio with strong global diversification and a focus on developed markets

Report created on Apr 2, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio consists predominantly of ETFs, with the Vanguard FTSE Developed World UCITS ETF making up 70%, Amundi Stoxx Europe 600 UCITS ETF at 20%, and Vanguard FTSE Emerging Markets UCITS ETF at 10%. This composition leans heavily towards developed markets, reflecting a balanced approach. Compared to global benchmarks, the portfolio aligns well with typical global equity allocations, providing broad exposure. This structure is beneficial for achieving diversification, yet it may lack the dynamism of more varied asset classes. Consider introducing bonds or alternative assets to enhance risk management and potential returns.

Growth Info

Historically, the portfolio has shown a solid CAGR of 10.19%, demonstrating strong growth over time. The maximum drawdown of -25.40% indicates significant volatility during downturns, common in equity-heavy portfolios. By comparing this to a global equity benchmark, the performance is commendable, reflecting efficient asset selection. However, past performance doesn't guarantee future results. To mitigate potential volatility, consider reviewing asset allocation periodically and exploring defensive assets to cushion against market dips.

Projection Info

The Monte Carlo simulation, using historical data, projects potential future outcomes by running 1,000 different scenarios. It shows a median (50th percentile) growth of 181.8% and a positive return in 955 simulations. While the 5th percentile indicates a low 2.1% growth, the 67th percentile suggests a robust 271.5% return. These projections highlight the range of possible outcomes, emphasizing that while the portfolio has potential for significant growth, it also carries inherent risks. Regularly reassessing the portfolio and staying informed about market trends can help in navigating these uncertainties.

Asset classes Info

  • Stocks
    100%

The portfolio is entirely invested in stocks, offering no exposure to other asset classes like bonds or real estate. This singular focus can lead to higher volatility, as stocks tend to fluctuate more than other asset classes. Compared to balanced benchmarks, which often include bonds, this portfolio may experience more pronounced swings. To enhance stability, consider diversifying into fixed income or alternative investments, which can provide a buffer against equity market volatility and potentially smooth out returns over time.

Sectors Info

  • Technology
    22%
  • Financials
    19%
  • Industrials
    12%
  • Health Care
    11%
  • Consumer Discretionary
    10%
  • Telecommunications
    8%
  • Consumer Staples
    7%
  • Energy
    4%
  • Basic Materials
    4%
  • Utilities
    3%
  • Real Estate
    2%

Sector allocation is diverse, with technology (22%) and financial services (19%) leading. This mirrors many global indices but exposes the portfolio to sector-specific risks. For instance, tech-heavy portfolios can be volatile during interest rate hikes. Other sectors, like healthcare and consumer cyclicals, offer balance. The sector diversity supports overall stability, yet it's essential to monitor sector trends and adjust allocations as needed. Regularly reviewing sector performance and potential shifts can help maintain a balanced risk profile.

Regions Info

  • North America
    51%
  • Europe Developed
    31%
  • Asia Emerging
    6%
  • Japan
    4%
  • Asia Developed
    3%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is well-diversified, with 51% in North America and 31% in Europe Developed. This aligns with global benchmarks, providing exposure to stable markets. However, emerging markets like Asia and Latin America are underrepresented, potentially limiting growth opportunities. While developed markets offer stability, consider increasing exposure to emerging regions for enhanced diversification and growth potential. This can help mitigate risks associated with geopolitical events or economic downturns in specific regions.

Market capitalization Info

  • Mega-cap
    47%
  • Large-cap
    34%
  • Mid-cap
    17%
  • Small-cap
    1%

The portfolio's market capitalization distribution is skewed towards mega-cap (47%) and big-cap (34%) stocks, with minimal exposure to small and micro-cap stocks. This aligns with global indices, reflecting a focus on established companies. While mega and big caps offer stability, they may lack the growth potential of smaller companies. Consider introducing small-cap stocks to capture growth opportunities and enhance diversification. This can lead to a more balanced risk-return profile, leveraging the stability of large caps with the dynamism of smaller firms.

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 achieve the best risk-return ratio with the current assets. This involves adjusting the allocation between the existing ETFs to maximize returns for a given level of risk. Although diversification is already broad, this optimization can fine-tune the portfolio's efficiency. Regularly revisiting asset weights and assessing market conditions can help maintain an optimal balance, ensuring the portfolio remains aligned with risk tolerance and investment goals.

Ongoing product costs Info

  • Amundi Stoxx Europe 600 UCITS ETF C GBP 0.07%
  • Weighted costs total (per year) 0.01%

The portfolio benefits from low costs, with the Amundi Stoxx Europe 600 ETF having a TER of 0.07% and an overall TER of 0.01%. Low costs are advantageous for long-term growth, as they minimize the drag on returns. Compared to industry averages, these costs are impressively low, supporting better long-term performance. Maintaining this cost efficiency is crucial, so regularly reviewing fund fees and exploring cost-effective alternatives can help sustain this advantage. Ensure any new investments align with this cost-conscious approach.

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