A balanced portfolio with strong global diversification and efficient cost structure

Report created on Apr 8, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

This portfolio is composed of three ETFs, focusing on the S&P 500, emerging markets, and small-cap stocks. With 37.14% in the Vanguard S&P 500 ETF, 34.29% in the iShares MSCI Emerging Markets ETF, and 28.57% in the SPDR MSCI World Small Cap ETF, the portfolio is heavily weighted towards equities. This structure aligns with a balanced investment strategy, offering exposure to different market segments. While the portfolio is broadly diversified, it may benefit from additional asset classes like bonds for further risk mitigation.

Growth Info

Historically, the portfolio has achieved a Compound Annual Growth Rate (CAGR) of 8.43%, which is respectable for a balanced risk profile. The maximum drawdown of -28.36% indicates potential volatility during market downturns. Compared to benchmarks, this performance suggests solid returns with manageable risk. However, past performance is not a guarantee of future results, and investors should consider this when making decisions. To enhance resilience, consider strategies to reduce drawdowns, such as diversifying further or employing hedging techniques.

Projection Info

Monte Carlo simulations, which use historical data to predict future outcomes, indicate a median growth of 169.2% for this portfolio. The simulations show a wide range of potential outcomes, with a 5th percentile return of -11.4% and a 67th percentile return of 261.4%. This highlights the inherent uncertainty in projections. While the annualized return of 8.64% is promising, it's crucial to remember that these simulations are not foolproof forecasts. Regularly reviewing and adjusting the portfolio can help navigate different market conditions.

Asset classes Info

  • Stocks
    100%

The portfolio is 100% invested in stocks, lacking exposure to other asset classes like bonds or real estate. While this concentration can drive higher returns, it also increases vulnerability to equity market volatility. Diversifying across asset classes typically reduces risk by spreading exposure. Adding fixed income or alternative investments could provide stability and income, particularly during equity market downturns. Balancing growth with safety is key for a well-rounded portfolio.

Sectors Info

  • Technology
    23%
  • Financials
    18%
  • Consumer Discretionary
    13%
  • Industrials
    10%
  • Telecommunications
    8%
  • Health Care
    8%
  • Consumer Staples
    5%
  • Basic Materials
    4%
  • Energy
    4%
  • Real Estate
    4%
  • Utilities
    3%

Sector allocation shows a significant tilt towards technology (23%) and financial services (18%), followed by consumer cyclicals (13%) and industrials (10%). This diversification across sectors aligns well with global benchmarks, providing a balanced approach. However, tech-heavy portfolios may experience higher volatility, especially if interest rates rise. Ensuring sector diversity helps mitigate sector-specific risks and can enhance overall portfolio stability. Consider periodic reviews to maintain sector balance in line with market trends.

Regions Info

  • North America
    56%
  • Asia Emerging
    18%
  • Asia Developed
    10%
  • Europe Developed
    5%
  • Africa/Middle East
    4%
  • Japan
    4%
  • Latin America
    3%
  • Australasia
    1%
  • Europe Emerging
    1%

Geographically, the portfolio is heavily weighted towards North America (56%), with notable exposure to Asia Emerging (18%) and Asia Developed (10%). This allocation offers broad global diversification but may underrepresent Europe and other regions. A more balanced geographic spread can reduce region-specific risks and capture global growth opportunities. Consider increasing exposure to underrepresented regions, such as Europe or Latin America, to enhance diversification and potential returns.

Market capitalization Info

  • Mega-cap
    37%
  • Large-cap
    25%
  • Mid-cap
    18%
  • Small-cap
    15%
  • Micro-cap
    4%

The portfolio's market capitalization breakdown includes 37% in mega-cap, 25% in big-cap, 18% in medium-cap, 15% in small-cap, and 4% in micro-cap stocks. This distribution provides a healthy mix of stability from large-cap stocks and growth potential from smaller companies. Maintaining this balance can optimize risk and return, as large caps offer resilience while small caps provide growth opportunities. Regularly reviewing market cap exposure ensures alignment with investment goals and 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 portfolio could be optimized for a better risk-return ratio using the Efficient Frontier concept. This involves adjusting allocations among current assets to achieve the best possible returns for a given risk level. While the current portfolio is well-structured, exploring optimization can uncover opportunities to enhance performance. However, remember that "efficiency" focuses on risk-return trade-offs, not necessarily diversification or other investment goals.

Dividends Info

  • Vanguard S&P 500 UCITS ETF 0.30%
  • Weighted yield (per year) 0.11%

The portfolio's dividend yield is relatively low at 0.11%, indicating a focus on capital appreciation rather than income generation. While dividends can provide a steady income stream, they are less crucial for investors prioritizing growth. For those seeking income, consider integrating dividend-focused strategies or funds. Balancing growth and income can enhance overall portfolio performance and cater to varying financial goals.

Ongoing product costs Info

  • iShares MSCI Emerging Markets UCITS Dist 0.18%
  • Vanguard S&P 500 UCITS ETF 0.07%
  • SPDR MSCI World Small Cap UCITS 0.45%
  • Weighted costs total (per year) 0.22%

With a Total Expense Ratio (TER) of 0.22%, the portfolio is cost-efficient, supporting better long-term returns. Low costs mean more of your investment returns stay in your pocket, compounding over time. This alignment with best practices is commendable, as high fees can erode investment returns significantly. Continuously monitoring and minimizing costs ensures that your portfolio remains efficient and competitive.

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