Balanced Portfolio with Strong U.S. Focus and High Tech Exposure Offers Solid Growth Potential

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 who values growth through equity exposure while maintaining some diversification. Such investors have a moderate risk tolerance, seeking capital appreciation with a focus on the U.S. market. They are comfortable with market fluctuations and aim for long-term growth, possibly with a 5 to 10-year investment horizon. While dividends are not the primary focus, they appreciate the additional income stream. These investors are willing to accept short-term volatility for the potential of higher returns over the long run.

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 consists of five ETFs, with the Vanguard S&P 500 ETF taking up 50% of the allocation, indicating a strong focus on large-cap U.S. equities. The Invesco NASDAQ 100 ETF at 20% further emphasizes a tech-heavy approach. International exposure is provided by the Vanguard Total International Stock Index Fund ETF Shares at 15%. The Avantis U.S. Small Cap Value ETF and VanEck Semiconductor ETF add a touch of diversity with 10% and 5% allocations, respectively. This composition suggests a balanced yet U.S.-centric investment strategy with a substantial tilt towards technology and growth-oriented sectors.

Growth Info

The portfolio has demonstrated impressive historical performance with a compound annual growth rate (CAGR) of 16.15%. However, it has experienced a maximum drawdown of -26.55%, indicating potential volatility. The days that make up 90% of returns are 21, showing that the portfolio's performance is driven by a few significant days. This highlights the importance of staying invested during volatile periods to capture these gains. The strong historical performance is a testament to the portfolio's growth potential, but investors should be prepared for the ups and downs that come with it.

Projection Info

Using a Monte Carlo simulation, which involves running multiple scenarios to predict future performance, the portfolio shows promising results. With 1,000 simulations, the median (50th percentile) end value is 911.76%, and the 67th percentile is 1,445.38%. Impressively, 997 simulations resulted in positive returns, with an annualized return of 20.78%. This forward projection suggests robust growth potential, but it's essential to remember that these are hypothetical scenarios and actual results can vary. Investors should consider their risk tolerance and investment horizon when interpreting these projections.

Asset classes

  • Stocks
    100%
  • Cash
    0%
  • Other
    0%
  • No data
    0%

The portfolio is heavily weighted towards stocks, with 99.71% of the allocation in equities. This indicates a high-risk, high-reward strategy, as equities have historically provided higher returns but also come with increased volatility. A small portion is allocated to cash and other categories, offering minimal risk mitigation. While this asset class allocation aligns with a growth-focused strategy, investors seeking to lower risk might consider diversifying into other asset classes like bonds. However, given the current composition, the portfolio is well-suited for those comfortable with equity exposure.

Sectors

  • Technology
    34%
  • Financials
    13%
  • Consumer Discretionary
    11%
  • Telecommunications
    9%
  • Industrials
    9%
  • Health Care
    8%
  • Consumer Staples
    5%
  • Energy
    4%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    2%

The portfolio is notably concentrated in the technology sector, accounting for 34.30% of the allocation. Other significant sectors include financial services, consumer cyclicals, and communication services. This sector allocation reflects a growth-oriented approach, capitalizing on the tech industry's potential. However, such concentration can lead to increased risk if the tech sector underperforms. Diversifying into less correlated sectors could enhance stability and reduce volatility. Investors should evaluate their sector exposure regularly to ensure it aligns with their risk tolerance and market expectations.

Regions

  • North America
    84%
  • Europe Developed
    7%
  • Asia Emerging
    3%
  • Japan
    2%
  • Asia Developed
    2%
  • Australasia
    1%
  • Latin America
    1%
  • Africa/Middle East
    1%
  • Europe Emerging
    0%

Geographically, the portfolio is predominantly focused on North America, with 84.19% of assets allocated there. This U.S.-centric approach suggests confidence in the U.S. market's growth potential but also exposes the portfolio to regional risks. Limited exposure to Europe, Asia, and other regions indicates potential for greater diversification. Broadening geographic allocation could mitigate risks associated with regional economic downturns and tap into growth opportunities in emerging and developed markets outside North America.

Redundant positions

  • Invesco NASDAQ 100 ETF
    Vanguard S&P 500 ETF
    High correlation

The portfolio exhibits high correlation between the Invesco NASDAQ 100 ETF and the Vanguard S&P 500 ETF. This suggests that these assets tend to move in the same direction, providing limited diversification benefits. While such correlation can enhance returns during bullish markets, it can also amplify losses in downturns. Investors should consider reducing exposure to highly correlated assets to improve diversification. By selecting assets with lower correlations, the portfolio can achieve a more balanced risk-return profile, potentially enhancing long-term stability.

Dividends

  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Invesco NASDAQ 100 ETF 0.60%
  • VanEck Semiconductor ETF 0.40%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.00%
  • Weighted yield (per year) 1.34%

The portfolio offers a moderate dividend yield of 1.34%, with contributions from various ETFs. The Vanguard Total International Stock Index Fund ETF Shares provides the highest yield at 3.0%, while the VanEck Semiconductor ETF offers the lowest at 0.4%. This dividend yield adds a layer of income generation to the portfolio, appealing to investors seeking both growth and income. Regularly reviewing dividend yields and payout stability can help investors maximize income potential while maintaining growth exposure. Balancing growth and income can enhance overall portfolio performance.

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%, reflecting cost-efficient management. The Vanguard S&P 500 ETF boasts the lowest cost at 0.03%, while the VanEck Semiconductor ETF is the most expensive at 0.35%. Keeping investment costs low is crucial for optimizing long-term returns, as high fees can erode gains over time. Investors should remain vigilant about expense ratios and consider reallocating to lower-cost alternatives if necessary. Maintaining a low-cost portfolio aligns with sound investment principles, ensuring more of the returns stay with the investor.

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 removing overlapping assets that offer no diversification benefits. The portfolio can be adjusted along the efficient frontier to achieve a riskier or more conservative profile. To lower risk, consider diversifying into less correlated assets or other asset classes like bonds. For a riskier approach, increase exposure to high-growth sectors or equities. The current tech-heavy allocation suggests a growth bias. Adjusting sector and geographic allocations can also enhance diversification, aligning the portfolio with the investor's risk tolerance and financial goals.

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