A balanced and broadly diversified portfolio with a strong focus on global equities
Risk profile
- Secure Speculative
The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.
Diversification profile
- Focused Diversified
The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.
What type of investor this portfolio is suitable for
Balanced Investors
This portfolio suits an investor seeking balanced growth with moderate risk tolerance and a long-term investment horizon. It's designed for individuals comfortable with the fluctuations of the stock market, prioritizing capital appreciation while employing global diversification to manage risk. The investor likely values the potential for higher returns from equities and is willing to accept the associated volatility, with a financial foundation that supports riding out market downturns.
Positions
-
Vanguard FTSE All-World UCITS ETF USD Accumulation
VWCE - IE00BK5BQT80 60.00% -
iShares Core MSCI Emerging Markets IMI UCITS
IS3N - IE00BKM4GZ66 20.00% -
SPDR® MSCI Europe Small Cap Value Weighted UCITS ETF EUR Acc
ZPRX - IE00BSPLC298 20.00%
The portfolio is structured with a 60% allocation in a global ETF, 20% in emerging markets, and the remaining 20% in European small-cap stocks. This composition reflects a strategic emphasis on global diversification across developed and emerging markets, with a tilt towards small-cap value stocks in Europe. Comparing this to a typical balanced portfolio, the allocation is notably international with a significant weight in equities, suggesting an approach that seeks growth while managing risk through geographical and sectoral diversification.
Growth
Historically, this portfolio has shown a Compound Annual Growth Rate (CAGR) of 10.39%, with a maximum drawdown of -35.24%. These figures highlight its resilience and potential for recovery following market downturns. The days contributing most significantly to returns underscore the impact of short-term market movements on overall performance. Benchmarking against a standard balanced portfolio, which typically has lower volatility, this portfolio's performance suggests a well-managed risk-return trade-off, suitable for investors comfortable with moderate risk.
Projection
Monte Carlo simulations, which project future performance based on historical data, show a wide range of outcomes with a median increase of 222.5%. While these simulations offer a glimpse into potential future states, it's crucial to remember that they are based on past market behavior, which is not a guaranteed predictor of future performance. This tool helps in understanding potential risk and return profiles, enabling informed decision-making about future investment adjustments.
Asset classes
- Stocks 100%
- Other 0%
- Cash 0%
- No data 0%
The portfolio's exclusive investment in stocks demonstrates a clear focus on capital growth over income, aligning with a higher risk tolerance. While this single-asset class approach simplifies the portfolio, it also exposes it to greater market volatility. Diversifying across different asset classes, such as bonds or real estate, could provide additional risk mitigation and income through dividends or interest, complementing the growth potential of equities.
Sectors
- Technology 21%
- Financials 18%
- Industrials 13%
- Consumer Discretionary 12%
- Telecommunications 8%
- Health Care 7%
- Basic Materials 5%
- Consumer Staples 5%
- Energy 4%
- Real Estate 3%
- Utilities 3%
With technology and financial services making up nearly 40% of the portfolio, there's a strong tilt towards sectors that can offer high growth but may also face significant volatility. The presence of industrials, consumer cyclicals, and communication services further indicates a growth-oriented strategy. However, this concentration increases sector-specific risk, which could be balanced by diversifying more evenly across other sectors, potentially reducing volatility without significantly compromising growth prospects.
Regions
- North America 39%
- Europe Developed 29%
- Asia Emerging 13%
- Asia Developed 8%
- Japan 4%
- Africa/Middle East 3%
- Latin America 2%
- Australasia 1%
- Europe Emerging 1%
The geographic allocation emphasizes a robust presence in North America and developed European markets, supplemented by meaningful exposure to emerging markets in Asia. This global spread leverages growth opportunities worldwide while mitigating region-specific risks. However, the modest allocation to emerging markets and smaller regions like Latin America and Africa/Middle East suggests room for increased diversification to take advantage of growth in these areas.
Market capitalization
- Mega-cap 38%
- Large-cap 27%
- Mid-cap 25%
- Small-cap 8%
- Micro-cap 0%
The portfolio's market capitalization breakdown, with a focus on mega and big-cap stocks, indicates a preference for stability and lower volatility associated with larger companies. However, the allocation to medium and small-cap stocks, particularly through the European small-cap ETF, introduces growth potential at a higher risk level. This mix supports a balanced approach, blending the safety of large caps with the growth opportunities of smaller companies.
Ongoing product costs
- iShares Core MSCI Emerging Markets IMI UCITS 0.18%
- Vanguard FTSE All-World UCITS ETF USD Accumulation 0.22%
- SPDR® MSCI Europe Small Cap Value Weighted UCITS ETF EUR Acc 0.30%
- Weighted costs total (per year) 0.23%
The Total Expense Ratios (TERs) of the ETFs in the portfolio average to 0.23%, which is relatively low, ensuring that costs do not significantly erode returns. Keeping costs low is crucial for enhancing long-term investment outcomes, as even small differences in fees can have a substantial impact over time. This portfolio benefits from a cost-efficient structure, supporting better performance.
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.
The portfolio's current expected return is well-positioned, but optimization analysis suggests there's potential to achieve an 11.49% expected return at the same risk level. This indicates that with some adjustments, particularly in asset allocation or diversification across different dimensions, the portfolio could enhance its risk-return profile. Optimization should be approached cautiously, considering transaction costs and tax implications of making changes.
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