Balanced Portfolio with High Growth and Income Potential but Limited Diversification and High Correlation

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 a balanced investor seeking a mix of growth and income. Such an investor is comfortable with moderate risk and has a medium to long-term investment horizon. They value the potential for capital appreciation while also appreciating the role of dividends in providing income. This investor is likely focused on the U.S. market and is willing to accept the associated risks of regional concentration. They understand the importance of staying invested to capture market gains and are open to refining their strategy to enhance diversification.

Positions

  • JPMorgan Nasdaq Equity Premium Income ETF
    JEPQ - US46654Q2030
    32.50%
  • Vanguard S&P 500 ETF
    VOO - US9229083632
    32.50%
  • Schwab U.S. Large-Cap Growth ETF
    SCHG - US8085243009
    30.00%
  • Tidal Trust II - YieldMax Magnificent 7 Fund of Option Income ETFs
    YMAG
    5.00%

This portfolio is composed of four exchange-traded funds (ETFs), with a strong focus on equities. The largest allocations are the JPMorgan Nasdaq Equity Premium Income ETF and the Vanguard S&P 500 ETF, each making up 32.5% of the portfolio. The Schwab U.S. Large-Cap Growth ETF follows closely with a 30% allocation. A smaller position in the Tidal Trust II - YieldMax Magnificent 7 Fund of Option Income ETFs rounds out the portfolio at 5%. This composition suggests a strategy focused on capturing growth from large-cap U.S. equities, with a tilt towards income generation.

Warning The historical data covers less than 2 years, which reduces the confidence in the calculated values.

Growth Info

Historically, this portfolio has demonstrated impressive performance with a compound annual growth rate (CAGR) of 26.88%. Despite a maximum drawdown of -10.51%, the portfolio has shown resilience. The concentrated nature of the returns, with 90% of gains occurring in just 11 days, highlights the importance of staying invested to capture these pivotal moments. This performance suggests that the portfolio has been well-positioned to benefit from market upswings, though it also indicates potential volatility during downturns.

Warning Due to limited historical data, this may show extreme values that are not realistic.

Projection Info

Using a Monte Carlo simulation, which models future performance by simulating various scenarios, the portfolio shows promising potential. Assuming a hypothetical initial investment, the simulation predicts an annualized return of 33.25%, with all simulations yielding positive returns. The median outcome suggests a significant growth of over 5,237.22%. However, it's important to remember that these projections are based on historical data and assumptions, and actual future performance may vary. This forward-looking analysis underscores the portfolio's potential for continued strong performance, albeit with inherent risks.

Asset classes

  • Stocks
    90%
  • No data
    5%
  • Bonds
    4%
  • Cash
    1%

The portfolio is heavily weighted towards stocks, comprising 89.68% of the asset allocation. This concentration in equities suggests a strategy focused on capital appreciation. There's a small allocation to bonds and cash, which may provide some stability but is unlikely to significantly dampen volatility. The remaining portion is not classified, indicating potential investments in alternative assets or mixed strategies. This asset class distribution aligns with the portfolio's balanced risk classification but suggests limited diversification across different investment vehicles.

Sectors

  • Technology
    42%
  • Telecommunications
    12%
  • Consumer Discretionary
    12%
  • Health Care
    9%
  • Financials
    7%
  • Industrials
    5%
  • Consumer Staples
    4%
  • Basic Materials
    1%
  • Energy
    1%
  • Utilities
    1%
  • Real Estate
    1%

The sector allocation is dominated by technology, which makes up 41.53% of the portfolio. This indicates a strong belief in the growth potential of tech stocks. Other sectors like Communication Services, Consumer Cyclicals, and Healthcare also have notable allocations. However, sectors such as Basic Materials, Energy, and Utilities have minimal representation. This sector concentration may lead to higher risk if technology faces downturns. A more diversified sector allocation could help mitigate sector-specific risks and provide more balanced growth opportunities.

Regions

  • North America
    94%
  • Europe Developed
    1%
  • Latin America
    0%
  • Asia Developed
    0%
  • Asia Emerging
    0%

Geographically, the portfolio is heavily concentrated in North America, with 93.95% of assets allocated to this region. This focus reflects a strong belief in the U.S. market's growth prospects. However, it also exposes the portfolio to risks associated with regional economic and political factors. Minimal exposure to Europe, Latin America, and Asia suggests limited participation in global growth opportunities. Diversifying geographically could help reduce regional risks and capture growth in emerging markets, providing a more balanced global investment approach.

Redundant positions

  • JPMorgan Nasdaq Equity Premium Income ETF
    Schwab U.S. Large-Cap Growth ETF
    Vanguard S&P 500 ETF
    High correlation

The portfolio exhibits high correlation among its assets, particularly between the JPMorgan Nasdaq Equity Premium Income ETF, Schwab U.S. Large-Cap Growth ETF, and Vanguard S&P 500 ETF. This correlation indicates that these assets tend to move in the same direction, which can amplify both gains and losses. While this can be beneficial in a rising market, it also means the portfolio may lack diversification benefits. Reducing correlation by introducing less correlated assets could enhance diversification, potentially smoothing out returns and reducing overall portfolio risk.

Dividends

  • JPMorgan Nasdaq Equity Premium Income ETF 9.30%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Vanguard S&P 500 ETF 1.20%
  • Tidal Trust II - YieldMax Magnificent 7 Fund of Option Income ETFs 31.50%
  • Weighted yield (per year) 5.11%

The portfolio boasts a strong dividend yield of 5.11%, driven largely by the high yield of the Tidal Trust II - YieldMax Magnificent 7 Fund of Option Income ETFs at 31.5%. The JPMorgan Nasdaq Equity Premium Income ETF also contributes significantly with a 9.3% yield. This income generation can provide a buffer against market volatility and offer a steady cash flow. However, reliance on high-yielding assets can introduce additional risk, as these yields may not be sustainable in all market conditions. Balancing income generation with growth potential is key.

Ongoing product costs

  • JPMorgan Nasdaq Equity Premium Income ETF 0.35%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Vanguard S&P 500 ETF 0.03%
  • Tidal Trust II - YieldMax Magnificent 7 Fund of Option Income ETFs 1.28%
  • Weighted costs total (per year) 0.20%

Portfolio costs are relatively low, with a total expense ratio (TER) of 0.2%. The Vanguard S&P 500 ETF and Schwab U.S. Large-Cap Growth ETF contribute to this efficiency with minimal fees of 0.03% and 0.04%, respectively. However, the Tidal Trust II - YieldMax Magnificent 7 Fund of Option Income ETFs has a notably higher cost at 1.28%, which could impact overall returns. Keeping investment costs low is crucial for maximizing net returns. Monitoring and potentially adjusting high-cost positions can help maintain cost efficiency.

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.

Before optimizing, focus on reducing asset overlap to enhance diversification benefits. A more efficient portfolio could be achieved by addressing high correlation among current holdings. Moving along the efficient frontier can help tailor the portfolio to be riskier or more conservative, depending on personal goals. This involves balancing risk and return by adjusting asset allocations. While the current portfolio shows strong expected returns, exploring options to optimize it further could lead to better risk-adjusted performance and align more closely with individual risk tolerance.

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