Balanced Portfolio with Broad Diversification and Moderate Risk Suited for Long-Term Growth and Stability

Report created on Nov 25, 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 composed of four main ETFs, with a significant emphasis on global stock markets. The largest holding is the Vanguard FTSE All-World UCITS ETF at 40%, followed by the Vanguard S&P 500 UCITS ETF at 35%. The SPDR MSCI USA Small Cap Value ETF holds 20%, while the iShares Physical Gold ETC rounds it off at 5%. This configuration suggests a strong inclination towards equities with a small allocation to gold. Such a mix reflects a balanced approach, combining broad market exposure with a touch of diversification through gold. This setup aims to capture global growth while managing volatility.

Growth Info

Historically, the portfolio has delivered impressive returns with a CAGR of 14.53%. However, it has also faced a maximum drawdown of -27.63%, indicating susceptibility to market downturns. This performance highlights the potential for significant gains, albeit with periods of volatility. Understanding these dynamics is crucial for setting realistic expectations. To enhance stability, consider strategies that mitigate drawdowns, such as diversifying further or incorporating assets with low correlation to equities. This balance can help maintain growth while reducing the impact of market fluctuations.

Projection Info

Using a Monte Carlo simulation, which employs random sampling to predict future outcomes, the portfolio was assessed with a hypothetical initial investment. The results are promising, with a median projected growth of 535.2% and a high likelihood of positive returns in 997 out of 1,000 simulations. This suggests a strong growth potential over the long term. Nevertheless, it’s important to remember that projections are not guarantees. To optimize future performance, regularly review and adjust the portfolio in line with changing market conditions and personal financial goals, ensuring it remains aligned with risk tolerance.

Asset classes Info

  • Stocks
    95%
  • Other
    5%

The portfolio is heavily skewed towards stocks, comprising approximately 95% of the total allocation. A small portion is allocated to other assets, primarily gold, which may provide a hedge against equity market volatility. This concentration in equities is typical for growth-oriented portfolios, offering high return potential but also increased risk. To achieve a more balanced risk profile, consider incorporating additional asset classes such as bonds or real estate. This diversification can help smooth returns and provide stability during market downturns, aligning with a balanced investment strategy.

Sectors Info

  • Technology
    23%
  • Financials
    16%
  • Consumer Discretionary
    11%
  • Industrials
    9%
  • Health Care
    9%
  • Telecommunications
    7%
  • Consumer Staples
    5%
  • Energy
    4%
  • Basic Materials
    3%
  • Real Estate
    3%
  • Utilities
    3%

Sector allocation within the portfolio is diverse, with a notable emphasis on technology at 23.36%, followed by financial services and consumer cyclicals. This distribution reflects a growth-oriented approach, capitalizing on sectors with strong long-term potential. However, such concentration can also lead to increased volatility if these sectors underperform. To mitigate sector-specific risks, consider spreading investments across a broader range of industries. This can help ensure resilience against sector downturns, providing a more stable and consistent performance over time.

Regions Info

  • North America
    80%
  • Europe Developed
    6%
  • Asia Emerging
    2%
  • Japan
    2%
  • Asia Developed
    2%
  • Australasia
    1%
  • Latin America
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is heavily weighted towards North America, which accounts for over 80% of the allocation. This focus capitalizes on the robust performance of US markets but may expose the portfolio to regional risks. While this strategy has historically yielded strong returns, diversification across other regions could enhance resilience against localized economic downturns. Consider increasing exposure to emerging markets or other developed regions to balance geographic risk. This approach can capture diverse growth opportunities globally and reduce dependence on any single market.

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 is well-diversified and balanced, but there's room for optimization along the efficient frontier. By adjusting the asset mix, investors can shift towards a riskier or more conservative profile. For instance, increasing bond exposure can lower risk, while more equities can enhance growth potential. However, before making changes, focus on ensuring the portfolio aligns with personal financial goals and risk tolerance. Regular reviews and adjustments can optimize performance, but maintaining a disciplined approach is key to achieving long-term success.

Ongoing product costs Info

  • iShares Physical Gold ETC 0.25%
  • SPDR® MSCI USA Small Cap Value Weighted UCITS ETF USD Acc 0.30%
  • Vanguard S&P 500 UCITS Acc 0.07%
  • Vanguard FTSE All-World UCITS ETF USD Accumulation 0.22%
  • Weighted costs total (per year) 0.18%

The portfolio's total expense ratio (TER) is 0.18%, which is relatively low and indicates cost-effective management. Keeping investment costs low is crucial for maximizing net returns over time. Low expenses mean more of the portfolio's returns are retained, contributing to compounding growth. While current costs are competitive, it's important to periodically review and compare them with similar products to ensure ongoing cost efficiency. Maintaining a focus on minimizing fees can significantly impact long-term portfolio performance, aligning with a prudent investment strategy.

What next?

Create your own report?

Analyze your portfolio

Join our community!

Join Discord

The information provided on this platform is for informational purposes only and should not be considered as financial or investment advice. Insightfolio does not provide investment advice, personalized recommendations, or guidance regarding the purchase, holding, or sale of financial assets. The tools and content are intended for educational purposes only and are not tailored to individual circumstances, financial needs, or objectives.

Insightfolio assumes no liability for the accuracy, completeness, or reliability of the information presented. Users are solely responsible for verifying the information and making independent decisions based on their own research and careful consideration. Use of the platform should not replace consultation with qualified financial professionals.

Investments involve risks. Users should be aware that the value of investments may fluctuate and that past performance is not an indicator of future results. Investment decisions should be based on personal financial goals, risk tolerance, and independent evaluation of relevant information.

Insightfolio does not endorse or guarantee the suitability of any particular financial product, security, or strategy. Any projections, forecasts, or hypothetical scenarios presented on the platform are for illustrative purposes only and are not guarantees of future outcomes.

By accessing the services, information, or content offered by Insightfolio, users acknowledge and agree to these terms of the disclaimer. If you do not agree to these terms, please do not use our platform.

Instrument logos provided by Elbstream.

Help us improve Insightfolio

Your feedback makes a difference! Share your thoughts in our quick survey. Take the survey