Balanced and Broadly Diversified Portfolio with Strong Historic Performance and Moderate Costs

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 who seeks a mix of growth and stability. Such an investor typically has a moderate risk tolerance and a medium to long-term investment horizon. Their primary goal is to achieve capital appreciation while managing risk through diversification. They are comfortable with some market volatility and drawdowns, understanding that these are part of the process to achieve higher long-term returns. This type of investor values both growth potential and risk management.

Positions

  • Vanguard S&P 500 ETF
    VOO - US9229083632
    50.00%
  • Invesco NASDAQ 100 ETF
    QQQM - US46138G6492
    20.00%
  • Vanguard Total International Stock Index Fund ETF Shares
    VXUS - US9219097683
    15.00%
  • Avantis® U.S. Small Cap Value ETF
    AVUV - US0250728773
    10.00%
  • VanEck Semiconductor ETF
    SMH - US92189F6768
    5.00%

The portfolio is composed of five ETFs, with a significant allocation to Vanguard S&P 500 ETF at 50%, followed by Invesco NASDAQ 100 ETF at 20%, Vanguard Total International Stock Index Fund ETF Shares at 15%, Avantis U.S. Small Cap Value ETF at 10%, and VanEck Semiconductor ETF at 5%. This composition indicates a balanced approach with a focus on large-cap U.S. equities. A broad range of sectors and geographic regions are covered, suggesting a well-diversified portfolio. However, the high concentration in U.S. equities may expose it to domestic market risks.

Growth

Historically, the portfolio has performed well, with a compound annual growth rate (CAGR) of 15.35%. The maximum drawdown, or the largest peak-to-trough decline, was -26.55%, which reflects the portfolio's vulnerability during market downturns. Notably, 90% of the returns were concentrated in just 19 days, highlighting the importance of staying invested during volatile periods. This strong historical performance suggests that the portfolio has been effective in capturing market gains, although it has experienced significant volatility.

Projection

Using a Monte Carlo simulation with 1,000 iterations, the portfolio's future performance was projected. This simulation provides a range of possible outcomes by modeling different market scenarios. The 5th percentile projection shows a 145.57% return, while the median (50th percentile) is 946.34%, and the 67th percentile is 1,522.98%. An impressive 995 out of 1,000 simulations resulted in positive returns, with an average annualized return of 21.2%. These projections suggest a high probability of continued strong performance, albeit with inherent risks.

Asset classes

  • Stocks
    99%
  • Cash
    1%
  • Other
    0%
  • No data
    0%

The portfolio is almost entirely invested in stocks, with 99.47% allocated to equities. There is a minimal allocation to cash (0.50%) and other assets (0.02%). This heavy skew towards equities indicates a growth-oriented strategy, which can offer substantial returns but also comes with increased risk. To mitigate risk, it might be beneficial to consider adding more fixed-income assets or bonds, which can provide stability and income, especially during market downturns.

Sectors

  • Technology
    33%
  • Financials
    12%
  • Consumer Discretionary
    11%
  • Industrials
    9%
  • Health Care
    9%
  • Telecommunications
    9%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    2%

The sector allocation is diverse, with significant exposure to Technology (32.73%), Financial Services (12.14%), and Consumer Cyclicals (11.43%). Other notable sectors include Industrials, Healthcare, and Communication Services. The portfolio's heavy weighting in technology could lead to higher returns but also exposes it to sector-specific risks. Diversifying further into underrepresented sectors like Utilities and Real Estate could help balance the portfolio and reduce sector-specific volatility.

Regions

  • North America
    84%
  • Europe Developed
    7%
  • Japan
    2%
  • Asia Emerging
    2%
  • Asia Developed
    2%
  • Australasia
    1%
  • Latin America
    1%
  • Africa/Middle East
    0%
  • Europe Emerging
    0%

Geographically, the portfolio is predominantly invested in North America (84.05%), with smaller allocations to Europe Developed (6.95%), Japan (2.48%), and various other regions. This heavy concentration in North American assets could result in higher returns if the U.S. market performs well but also increases vulnerability to regional economic downturns. Diversifying further into emerging markets and underrepresented regions could provide additional growth opportunities and reduce geographic risk.

Dividends

  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Invesco NASDAQ 100 ETF 0.70%
  • VanEck Semiconductor ETF 0.40%
  • Vanguard S&P 500 ETF 1.30%
  • Vanguard Total International Stock Index Fund ETF Shares 3.00%
  • Weighted yield (per year) 1.41%

The portfolio's dividend yield is not specified, but given its heavy allocation to growth-oriented ETFs, it likely generates modest dividend income. Growth ETFs typically reinvest earnings to fuel expansion rather than paying out high dividends. For investors seeking regular income, incorporating high-dividend ETFs or dividend-focused funds could enhance the portfolio's income-generating potential without significantly altering its risk profile.

Ongoing product costs

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Invesco NASDAQ 100 ETF 0.15%
  • VanEck Semiconductor ETF 0.35%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.10%

The portfolio's total expense ratio (TER) is 0.1%, which is relatively low and indicates cost efficiency. The Vanguard S&P 500 ETF has the lowest expense ratio at 0.03%, while the VanEck Semiconductor ETF is the highest at 0.35%. Keeping costs low is crucial for maximizing net returns over time. Regularly reviewing and potentially replacing higher-cost funds with lower-cost alternatives can help maintain this cost efficiency and improve overall portfolio performance.

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