Balanced Moderately Diversified Portfolio with Strong Historical Performance and Focus on Dividend Yield

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 moderate growth with some income generation. Ideal for individuals with a medium-term investment horizon and a moderate risk tolerance. The focus on U.S. equities and dividend yield aligns with goals of achieving steady capital appreciation and regular income. This investor values diversification but is comfortable with some volatility, aiming for a mix of stability and growth. They appreciate low costs and are open to enhancing diversification to mitigate risks and optimize returns.

Positions

  • Vanguard S&P 500 ETF
    VOO - US9229083632
    25.00%
  • Schwab U.S. Dividend Equity ETF
    SCHD - US8085247976
    20.00%
  • Realty Income Corp
    O - US7561091049
    10.00%
  • iShares Short Treasury Bond ETF
    SHV - US4642886794
    10.00%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares
    VEA - US9219438580
    10.00%
  • Vanguard Real Estate Index Fund ETF Shares
    VNQ - US9229085538
    10.00%
  • Vanguard Dividend Appreciation Index Fund ETF Shares
    VIG - US9219088443
    5.00%
  • Consumer Staples Select Sector SPDR® Fund
    XLP - US81369Y3080
    5.00%
  • Utilities Select Sector SPDR® Fund
    XLU - US81369Y8865
    5.00%

The portfolio is composed of a mix of ETFs and individual stocks, with a strong emphasis on U.S. equities. The largest holding is the Vanguard S&P 500 ETF, making up 25% of the portfolio, followed by the Schwab U.S. Dividend Equity ETF at 20%. This allocation suggests a focus on stable, large-cap U.S. companies. Additionally, there's a 10% allocation to real estate through Realty Income Corp and the Vanguard Real Estate Index Fund. This composition provides a balance between growth and income, but it could benefit from further diversification to mitigate risks.

Growth Info

Historically, the portfolio has performed well, with a compound annual growth rate (CAGR) of 10.25%. This indicates that a hypothetical initial investment would have grown significantly over time. However, the maximum drawdown of -33.35% highlights potential volatility, which is a risk factor to consider. The days that make up 90% of returns are concentrated, suggesting that returns are driven by a few significant events. This performance reflects the portfolio's balanced risk profile, which is suitable for investors seeking moderate growth with some volatility.

Projection Info

A Monte Carlo simulation was conducted with 1,000 simulations to forecast potential future performance. This method uses random sampling to model possible outcomes of an investment over time. The median result shows a potential portfolio value increase of 213.69%, with a 67th percentile projection of 332.14%. With 949 simulations showing positive returns, the annualized return across all simulations is 10.01%. This projection suggests a positive outlook, but it's important to remember that actual future performance can vary significantly.

Asset classes Info

  • Stocks
    80%
  • Real Estate
    10%
  • Cash
    6%
  • Bonds
    4%
  • Other
    0%
  • No data
    0%

The portfolio's asset class allocation is predominantly in stocks, comprising 79.81% of the total. Real estate represents 10%, while bonds and cash make up 4.21% and 5.95%, respectively. This allocation leans towards growth-oriented investments, with a smaller emphasis on income-generating assets like bonds. The stock-heavy composition aligns with a balanced risk profile, offering potential for capital appreciation. However, introducing more bonds could reduce volatility and provide a cushion during market downturns, enhancing the portfolio's stability.

Sectors Info

  • Real Estate
    21%
  • Technology
    13%
  • Financials
    10%
  • Consumer Staples
    10%
  • Health Care
    8%
  • Industrials
    7%
  • Utilities
    6%
  • Consumer Discretionary
    6%
  • Energy
    4%
  • Telecommunications
    4%
  • Basic Materials
    2%

The sector allocation is diverse, with significant investments in real estate, technology, and financial services. Real estate leads at 20.81%, followed by technology at 12.67% and financial services at 10.37%. This spread across sectors helps mitigate risks associated with sector-specific downturns. However, the high concentration in real estate may expose the portfolio to sector-specific risks. Balancing this with increased exposure to underrepresented sectors, such as basic materials and energy, could enhance diversification and reduce potential volatility.

Regions Info

  • North America
    81%
  • Europe Developed
    6%
  • Japan
    2%
  • Asia Developed
    1%
  • Australasia
    1%
  • Africa/Middle East
    0%
  • Europe Emerging
    0%
  • Latin America
    0%
  • Asia Emerging
    0%

Geographically, the portfolio is heavily weighted towards North America, accounting for 80.80% of the assets. The remaining allocation is spread thinly across Europe Developed, Japan, and other regions. While this North American focus aligns with the investor's region, it may limit exposure to growth opportunities in emerging markets. Diversifying geographically can reduce regional risks and tap into global growth trends. Expanding investments in Europe, Asia, and other emerging markets could provide a more balanced global exposure and potentially enhance returns.

Redundant positions Info

  • Vanguard S&P 500 ETF
    Vanguard Dividend Appreciation Index Fund ETF Shares
    Schwab U.S. Dividend Equity ETF
    High correlation

The portfolio contains highly correlated assets, particularly among U.S. equity ETFs like the Vanguard S&P 500 ETF, Vanguard Dividend Appreciation Index Fund, and Schwab U.S. Dividend Equity ETF. This correlation suggests that these assets tend to move in the same direction, offering limited diversification benefits. While these assets are individually strong, reducing overlap could enhance the portfolio's risk-adjusted returns. Introducing assets with low correlation to the existing holdings can help mitigate risks and improve overall portfolio performance.

Dividends Info

  • Realty Income Corp 5.40%
  • Schwab U.S. Dividend Equity ETF 3.40%
  • iShares Short Treasury Bond ETF 5.10%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 3.00%
  • Vanguard Dividend Appreciation Index Fund ETF Shares 1.70%
  • Vanguard Real Estate Index Fund ETF Shares 3.80%
  • Vanguard S&P 500 ETF 1.20%
  • Consumer Staples Select Sector SPDR® Fund 2.60%
  • Utilities Select Sector SPDR® Fund 2.70%
  • Weighted yield (per year) 3.06%

The portfolio has a respectable total dividend yield of 3.06%, with contributions from various sources. Realty Income Corp offers the highest yield at 5.4%, followed by the iShares Short Treasury Bond ETF at 5.1%. This dividend focus provides a steady income stream, appealing to investors seeking regular cash flow. However, relying heavily on dividends can expose the portfolio to interest rate risks. Balancing dividend-paying stocks with growth-oriented investments could help maintain a healthy income while capturing capital appreciation opportunities.

Ongoing product costs Info

  • Schwab U.S. Dividend Equity ETF 0.06%
  • iShares Short Treasury Bond ETF 0.15%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 0.05%
  • Vanguard Dividend Appreciation Index Fund ETF Shares 0.06%
  • Vanguard Real Estate Index Fund ETF Shares 0.12%
  • Vanguard S&P 500 ETF 0.03%
  • Consumer Staples Select Sector SPDR® Fund 0.09%
  • Utilities Select Sector SPDR® Fund 0.09%
  • Weighted costs total (per year) 0.06%

The portfolio's total expense ratio (TER) is 0.06%, reflecting low investment costs. This is advantageous as lower fees can significantly enhance net returns over time. The Vanguard S&P 500 ETF, with an expense ratio of 0.03%, is the most cost-effective component. Keeping costs low is a smart strategy, allowing more of the portfolio's returns to compound over time. However, it's essential to ensure that low costs do not compromise the quality of the investments. Regularly reviewing and optimizing the cost structure can further improve 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.

Before optimizing the portfolio, addressing the overlap of highly correlated assets is crucial. Reducing redundancy can enhance diversification and improve risk-adjusted returns. Moving along the efficient frontier allows for adjusting risk levels. For a riskier profile, increase exposure to growth assets, while for a more conservative approach, shift towards bonds and cash. This strategy aligns with the investor's risk appetite and financial goals. Prioritize diversification and cost management to maximize long-term performance and resilience.

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