A global equity tracker portfolio with strong growth focus and high overlap across similar funds
Report created on Nov 4, 2024Risk profile
4/7
Diversification profile
3/5
Positions
-
XD db x-trackers MSCI World Index UCITS DR 1C
XDWD - IE00BJ0KDQ92 34.00% -
EU iShares Core MSCI World UCITS ETF USD (Acc) EUR
EUNL - IE00B4L5Y983 33.00% -
LC Lyxor Core MSCI World (DR) UCITS ETF
LCUW - LU1781541179 33.00%
This portfolio is built from three nearly identical global equity index funds, each holding roughly one third of the total. Structurally, that means 100% in stocks and effectively 100% in the same global index, just via different providers. This is relevant because holding multiple funds that copy the same index does not usually add diversification; it mostly just adds complexity. For a balanced risk profile, this equity-only setup is on the aggressive side. One possible step could be to simplify by using fewer overlapping index funds and, if desired, introduce a small allocation to more defensive assets to better match a “balanced” label.
Growth
Historically, this setup has delivered a strong compound annual growth rate (CAGR) of about 14.5%. CAGR is the “average yearly speed” of growth over time, smoothing out ups and downs, like calculating average speed on a road trip. Compared with typical global equity benchmarks, this result is very much in line and confirms the funds are doing their job efficiently. The maximum drawdown of around -34% shows that deep temporary losses are possible. While this past performance is reassuring, it cannot guarantee future results, so building expectations around both strong growth and occasional big drops is important.
Projection
The Monte Carlo analysis uses many random simulations based on historical patterns to explore a range of possible future outcomes. In simple terms, it shuffles past returns in thousands of different sequences to see how things might play out. The median result of about 587% and a 5th percentile of roughly 153% after the chosen horizon indicate a strong expected return with some downside risk. All simulations ending positive reflects the strong historical data for global equities, but that is not a promise. It can help to treat these numbers as scenario guides, not certainties, and plan for both optimistic and conservative paths.
Asset classes
- Stocks 100%
All assets here are stocks, with 0% in bonds, cash, or other types of investments. That makes the portfolio simple and clear, but also fully exposed to equity market swings. A balanced portfolio usually contains a mix of asset classes, because different types of investments tend to behave differently across economic cycles. This mix can reduce overall volatility and smooth out returns. While a 100% equity allocation is very effective for long-term growth, someone wanting a more balanced risk experience might consider gradually blending in a modest portion of less volatile assets to reduce the size of potential drawdowns.
Sectors
- Technology 28%
- Financials 16%
- Industrials 10%
- Consumer Discretionary 10%
- Health Care 10%
- Telecommunications 9%
- Consumer Staples 6%
- Energy 4%
- Basic Materials 3%
- Utilities 3%
- Real Estate 2%
Sector exposure is nicely diversified, with technology leading at 28%, followed by financial services, industrials, consumer cyclicals, healthcare, and others. This pattern is very similar to common global equity benchmarks, which is a strong indicator of healthy diversification across industries. The tech tilt mirrors the global market, so it’s not an unusual bet, but it does mean sensitivity to things like interest-rate shifts and innovation cycles. This alignment with global norms is a positive sign. Periodically checking whether any one sector grows far beyond comfort levels can help keep risk in line with personal preferences over time.
Regions
- North America 76%
- Europe Developed 16%
- Japan 5%
- Australasia 2%
- Asia Developed 1%
Geographically, about three quarters of the portfolio is in North America, with Europe and Japan making up most of the rest. This is very similar to standard global equity indices, which are naturally dominated by the largest economies and markets. This alignment is beneficial because it reflects the global market weight and avoids big, unintended regional bets. The flip side is relatively little exposure to emerging regions, which might limit participation in some faster-growing markets but also avoids their higher volatility. If a stronger global balance is desired, a small dedicated position to underrepresented regions could be considered, while still keeping the core global index approach.
Market capitalization
- Mega-cap 47%
- Large-cap 35%
- Mid-cap 17%
By market capitalization, the portfolio is heavily tilted to mega and big companies, with almost no exposure to small caps. Market cap simply measures company size; mega caps are the giants most people know. This structure closely matches global benchmarks and generally brings more stability and liquidity compared to smaller, more volatile companies. That’s a positive fit for a balanced profile. However, smaller companies can sometimes offer different growth patterns and diversification benefits. Someone wanting a bit more diversification across sizes could look at a modest complement targeting mid or smaller companies, while keeping this large-cap core as the main foundation.
Redundant positions
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High correlationLyxor Core MSCI World (DR) UCITS ETFdb x-trackers MSCI World Index UCITS DR 1CiShares Core MSCI World UCITS ETF USD (Acc) EUR
The three funds in this portfolio are highly correlated, meaning they move almost identically because they track the same global index. Correlation describes how often investments go up or down together; when it is close to 1, they behave almost like one asset. In downturns, this high correlation means there is little cushion from differences between the funds. On the positive side, this clarity makes it easy to understand overall risk. One practical step might be to reduce the number of overlapping global index funds and either simplify to one or two, or replace part of the overlap with genuinely different exposures if extra diversification is desired.
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.
From a risk–return perspective, this portfolio already sits in a sensible place along the equity-only Efficient Frontier. The Efficient Frontier is a line showing the best possible trade-off between risk and return for a given set of investments. Since all three holdings are almost identical, shifting weights between them barely changes that trade-off. Efficiency here would mostly come from simplifying the structure and possibly adding a genuinely different asset type to reshape the risk profile. It is important to remember that “efficient” means best risk-return ratio for the chosen assets, not necessarily the best fit for every personal goal or comfort level.
Ongoing product costs
- iShares Core MSCI World UCITS ETF USD (Acc) EUR 0.20%
- Lyxor Core MSCI World (DR) UCITS ETF 0.12%
- db x-trackers MSCI World Index UCITS DR 1C 0.17%
- Weighted costs total (per year) 0.16%
The total ongoing cost (TER) of about 0.16% per year is impressively low and a real strength of this setup. TER, or Total Expense Ratio, is like a yearly service fee taken directly from fund assets. Lower fees leave more of the return in your pocket, especially over long periods where compounding magnifies any cost differences. This cost level compares very favorably with both active funds and many other index options. To keep this advantage, it can help to periodically check that the chosen funds remain among the low-cost options and avoid adding higher-fee products without a clear, specific benefit.
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