Balanced Portfolio with Strong US Equity Focus and Moderate Diversification for Steady Growth
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 is suitable for a balanced investor seeking moderate risk and steady growth. Such investors typically aim for a blend of capital appreciation and income, with a medium to long-term investment horizon. They are comfortable with some market volatility, understanding that it may lead to higher returns over time. These investors value diversification but are willing to accept some concentration in specific regions or sectors to capture growth opportunities.
Positions
-
Vanguard S&P 500 Index ETF
VFV - CA92205Y1051 72.00% -
iShares Core Equity Portfolio
XEQT - CA46436D1087 28.00%
The portfolio is composed of two ETFs: Vanguard S&P 500 Index ETF and iShares Core Equity Portfolio, making up 72% and 28% of the portfolio, respectively. This setup leans heavily towards US equities, with a minor allocation to broader equities and cash. The combination of these ETFs provides a balanced yet moderately diversified portfolio, suitable for an investor looking for a blend of growth and stability. The allocation suggests a focus on capturing the performance of the broader US market while maintaining some exposure to global equities.
Growth
Historically, the portfolio has demonstrated impressive performance with a compound annual growth rate (CAGR) of 16.76%. The maximum drawdown of -27.98% indicates potential volatility, but the strong growth rate suggests resilience and recovery capability. The fact that 90% of the returns come from just 20 days highlights the importance of staying invested to capture these gains. This historical performance underlines the portfolio's potential for long-term growth, though investors should be prepared for periods of volatility.
Projection
A Monte Carlo simulation, which uses random sampling to predict future outcomes, was conducted with 1,000 simulations. Assuming a hypothetical initial investment, the results show a wide range of potential outcomes. The 5th percentile projects a return of 168.28%, while the 50th and 67th percentiles suggest returns of 704.43% and 959.71%, respectively. With 999 simulations resulting in positive returns, the portfolio is likely to continue its growth trajectory, although actual results may vary.
Asset classes
- US Equity 85%
- Stocks 7%
- Cash 0%
- Other 0%
The portfolio's asset class allocation is heavily weighted towards US equity at 84.59%, with a smaller allocation to global equities and minimal cash holdings. This concentration in US equities aligns with the portfolio's growth objectives but may expose it to market-specific risks. While this allocation has driven strong historical returns, diversifying into other asset classes could potentially reduce risk and enhance stability. Balancing growth and risk through a more diversified allocation could be beneficial.
Sectors
- Technology 30%
- Financials 15%
- Health Care 10%
- Consumer Discretionary 10%
- Industrials 9%
- Telecommunications 8%
- Consumer Staples 6%
- Energy 4%
- Basic Materials 3%
- Utilities 3%
- Real Estate 2%
The sector allocation is led by technology at 29.54%, followed by financial services, healthcare, and consumer cyclicals. This distribution reflects a strong emphasis on growth-oriented sectors, which have historically driven market performance. However, this concentration may increase exposure to sector-specific risks. A more balanced sector allocation could mitigate these risks and provide more stable returns. Diversifying into defensive sectors might help cushion the portfolio during market downturns.
Regions
- North America 92%
- Europe Developed 4%
- Japan 2%
- Asia Emerging 1%
- Asia Developed 1%
- Australasia 1%
- Africa/Middle East 0%
- Latin America 0%
- Europe Emerging 0%
Geographically, the portfolio is predominantly focused on North America, with 91.86% of assets in this region. This strong regional bias could lead to increased exposure to local economic and political risks. While the portfolio does have minor exposure to developed Europe, Japan, and other regions, increasing geographic diversification could help mitigate these risks. Expanding investments into other regions may provide additional growth opportunities and reduce potential volatility.
Dividends
- Vanguard S&P 500 Index ETF 1.00%
- iShares Core Equity Portfolio 1.80%
- Weighted yield (per year) 1.22%
The portfolio's dividend yield stands at 1.22%, with the Vanguard S&P 500 Index ETF yielding 1.0% and the iShares Core Equity Portfolio yielding 1.8%. While the yield is modest, it provides some income in addition to capital appreciation. Focusing on dividend growth could enhance the portfolio's income potential over time. Reinvesting dividends can also contribute to compounding returns, further boosting the portfolio's long-term 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 optimization chart suggests potential for improvement through diversification. Moving along the efficient frontier can help achieve a riskier or more conservative portfolio. By adjusting the allocation between asset classes and sectors, investors can align the portfolio with their risk tolerance and financial goals. While the current portfolio is moderately diversified, enhancing diversification could optimize the risk-return profile and improve long-term performance.
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