Balanced Diversified Portfolio with Strong Historic Performance and High Correlation in Core Holdings

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 diversified approach with exposure to both domestic and international markets. Such an investor values growth but is mindful of risk, aiming for steady capital appreciation over a medium to long-term horizon. They are comfortable with moderate volatility and understand the importance of diversification across sectors and geographies. Their goals likely include building wealth over time while maintaining a portfolio that can withstand market fluctuations.

Positions

  • Vanguard Total Stock Market Index Fund ETF Shares
    VTI - US9229087690
    40.00%
  • Vanguard S&P 500 ETF
    VOO - US9229083632
    26.60%
  • Vanguard Total International Stock Index Fund ETF Shares
    VXUS - US9219097683
    20.00%
  • Invesco QQQ Trust
    QQQ - US46090E1038
    10.00%
  • VanEck Semiconductor ETF
    SMH - US92189F6768
    3.40%

The portfolio consists of five ETFs, with Vanguard Total Stock Market Index Fund ETF Shares making up the largest portion at 40%. The Vanguard S&P 500 ETF follows with 26.6%, while the Vanguard Total International Stock Index Fund ETF Shares accounts for 20%. The Invesco QQQ Trust and VanEck Semiconductor ETF make up the remaining 13.4%. This composition shows a focus on broad market exposure with a tilt towards technology and large-cap stocks, which can provide steady growth. However, the portfolio's allocation might benefit from slight adjustments to enhance diversification further.

Growth Info

Historically, the portfolio has shown a commendable compound annual growth rate (CAGR) of 13.27%, indicating robust performance. However, it also experienced a maximum drawdown of -33.35%, highlighting periods of significant volatility. The portfolio's returns are concentrated, with 90% of returns occurring over just 33 days. This performance suggests that while the portfolio has the potential for high returns, it is also susceptible to market downturns. Investors might consider strategies to mitigate drawdowns, such as diversifying into less volatile asset classes.

Projection Info

A Monte Carlo simulation, which uses random sampling to predict future performance, was conducted with 1,000 simulations. Assuming a hypothetical initial investment, the results suggest an annualized return of 17.32%. Most simulations yielded positive returns, with the 50th percentile projection showing a potential growth of 659.4%. These projections indicate optimistic future performance, but investors should be cautious and prepared for variability. It's essential to maintain a long-term perspective and be ready for potential market fluctuations.

Asset classes Info

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

The portfolio is heavily concentrated in stocks, accounting for 99.58% of the holdings, with minimal allocations to cash and other assets. This stock-centric approach can drive substantial growth but also introduces higher risk. A more balanced asset allocation could help mitigate risk, especially during market downturns. Investors might consider incorporating bonds or other fixed-income assets to stabilize returns and reduce the overall portfolio volatility.

Sectors Info

  • Technology
    32%
  • Financials
    13%
  • Consumer Discretionary
    10%
  • Health Care
    10%
  • Industrials
    9%
  • Telecommunications
    9%
  • Consumer Staples
    6%
  • Energy
    3%
  • Basic Materials
    3%
  • Utilities
    3%
  • Real Estate
    2%

The portfolio's sector allocation is notably skewed towards technology, which comprises 32.2% of the holdings. Other significant sectors include financial services, consumer cyclicals, and healthcare. While this sector concentration can drive growth, it may also expose the portfolio to sector-specific risks. Diversifying into underrepresented sectors like utilities and real estate could enhance stability and provide a buffer against market volatility. A more even sector distribution can help in achieving a smoother performance curve.

Regions Info

  • North America
    80%
  • Europe Developed
    8%
  • Asia Emerging
    3%
  • Japan
    3%
  • Asia Developed
    3%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    0%
  • Europe Emerging
    0%

Geographically, the portfolio is predominantly focused on North America, with 80.3% of assets allocated there. Other regions such as Europe Developed, Asia Emerging, and Japan make up smaller portions. This North American bias could limit exposure to global growth opportunities. Expanding allocations to emerging markets and other developed regions can enhance diversification and capture potential growth in less correlated markets. A more global perspective can help balance regional risks and tap into diverse economic cycles.

Redundant positions Info

  • Vanguard Total Stock Market Index Fund ETF Shares
    Invesco QQQ Trust
    Vanguard S&P 500 ETF
    High correlation

The portfolio contains highly correlated assets, particularly among the Vanguard Total Stock Market Index Fund ETF Shares, Invesco QQQ Trust, and Vanguard S&P 500 ETF. This correlation suggests that these assets tend to move in the same direction, which can amplify risk during market downturns. Reducing overlap by introducing less correlated assets can improve diversification and potentially enhance risk-adjusted returns. Considering different asset classes or sectors can provide a more balanced portfolio.

Dividends Info

  • Invesco QQQ Trust 0.60%
  • VanEck Semiconductor ETF 0.40%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Vanguard Total International Stock Index Fund ETF Shares 3.00%
  • Weighted yield (per year) 1.51%

The portfolio's total dividend yield stands at 1.51%, with the Vanguard Total International Stock Index Fund ETF Shares offering the highest yield at 3.0%. While dividends provide a steady income stream, the overall yield is relatively modest. To increase income potential, investors might consider incorporating higher-yielding assets. However, it's essential to balance yield with growth potential and risk, ensuring that dividend-focused strategies align with the overall investment objectives.

Ongoing product costs Info

  • Invesco QQQ Trust 0.20%
  • VanEck Semiconductor ETF 0.35%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.07%

The portfolio's total expense ratio (TER) is a low 0.07%, indicating cost-efficient management. The Vanguard ETFs contribute to this low cost, with expense ratios ranging from 0.03% to 0.08%. The Invesco QQQ Trust and VanEck Semiconductor ETF have slightly higher costs but still remain competitive. Keeping investment costs low is crucial for maximizing net returns over time. Investors should continue to prioritize low-cost options and regularly review expenses to ensure they remain aligned with cost-efficiency goals.

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 current portfolio shows high asset correlation, suggesting limited diversification benefits. The efficient frontier concept suggests that an optimal portfolio offers the highest expected return for a given level of risk. However, due to the overlap in holdings, this portfolio may not be on the efficient frontier. To optimize, consider reducing correlated assets and incorporating more diverse holdings. This adjustment can potentially improve the risk-return profile and better position the portfolio for future growth.

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