Cautious Broadly Diversified Portfolio with Strong ESG Focus and Solid Historic Performance

Report created on Jul 8, 2024

Risk profile Info

3/7
Cautious
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

This portfolio consists of four Vanguard ESG ETFs, which aim for responsible investing across North America, Europe, Asia Pacific, and Emerging Markets. The portfolio is heavily weighted towards North America, representing 61% of the total allocation. The rest is spread across Europe and Asia, with smaller allocations to emerging markets. This broad diversification helps reduce risk while focusing on ESG principles. The portfolio's cautious risk classification aligns with a balanced approach, aiming for steady growth with moderate risk exposure. Consider maintaining this diversified strategy to balance growth and risk effectively.

Growth Info

Historically, this portfolio has shown impressive performance with a compound annual growth rate (CAGR) of 19.36%. Despite a maximum drawdown of -8.38%, the portfolio has demonstrated resilience. This indicates strong recovery potential and the ability to generate substantial returns over time. The high CAGR suggests that the portfolio is well-positioned to capitalize on market opportunities. However, past performance is not indicative of future results. It's essential to stay informed about market conditions and adjust the portfolio as needed to maintain its growth trajectory.

Projection Info

Using a Monte Carlo simulation with 1,000 iterations, the portfolio shows promising future potential. Assuming a hypothetical initial investment, the 5th percentile projects a 289.01% return, while the median (50th percentile) forecasts a 766.74% return, and the 67th percentile predicts a 993.65% return. All simulations resulted in positive returns, highlighting the portfolio's robustness. Monte Carlo simulations provide a range of possible outcomes, helping to understand potential risks and rewards. It's crucial to regularly review these projections and adjust the portfolio to align with changing market dynamics and personal investment goals.

Asset classes Info

  • Stocks
    100%

The portfolio is predominantly composed of stocks, with over 99% allocation in this asset class. This high concentration in equities suggests a focus on growth, but it also introduces volatility. While equities can offer significant returns, they are subject to market fluctuations. To manage risk, consider diversifying into other asset classes such as bonds or real estate, which can provide stability and income. Balancing equities with less volatile assets can help mitigate risk and enhance the portfolio's resilience during market downturns.

Sectors Info

  • Technology
    28%
  • Financials
    18%
  • Health Care
    13%
  • Consumer Discretionary
    12%
  • Telecommunications
    8%
  • Industrials
    8%
  • Consumer Staples
    6%
  • Real Estate
    4%
  • Basic Materials
    3%

The sector allocation is diverse, with significant exposure to technology (27.57%), financial services (18.27%), and healthcare (12.87%). These sectors have historically driven growth, but they can also be volatile. The portfolio's sector diversification helps spread risk across different industries, reducing the impact of sector-specific downturns. However, it's essential to monitor sector performance and adjust allocations as needed. Diversifying further into defensive sectors like consumer staples or utilities may provide stability and income during economic uncertainty, enhancing the portfolio's overall resilience.

Regions Info

  • North America
    61%
  • Europe Developed
    18%
  • Japan
    7%
  • Asia Emerging
    6%
  • Asia Developed
    5%
  • Australasia
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is heavily weighted towards North America (60.55%), followed by Europe (18.06%) and Asia (combined 17.02%). This allocation reflects a focus on developed markets, which tend to offer stability and growth potential. However, emerging markets, though riskier, can provide opportunities for higher returns. While the current geographic diversification helps balance risk, consider periodically reviewing regional allocations to capture growth opportunities in underrepresented areas. This approach can enhance the portfolio's potential return while maintaining a balanced risk profile.

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 aligns with a cautious risk profile, but there's room for optimization. By moving along the efficient frontier, investors can explore options to achieve a riskier or more conservative portfolio. Increasing exposure to bonds or other fixed-income securities can create a more conservative allocation, reducing volatility. Conversely, adding more equities or growth-oriented assets can enhance returns but increase risk. It's vital to align these adjustments with personal risk tolerance and investment goals. Focusing on optimizing the portfolio can enhance its performance while maintaining a stable risk profile.

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