High income ETF portfolio with balanced risk and strong diversification across sectors

Report created on Dec 8, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification

Positions

The portfolio consists entirely of the Amplify High Income ETF, which provides exposure to a variety of asset classes and sectors. This single ETF structure simplifies management while still offering diversification benefits. With nearly half of the portfolio in stocks and a substantial allocation to bonds, it aims to balance growth and income. The presence of other asset classes adds a layer of diversification, albeit with a small proportion. This composition is suitable for investors seeking a straightforward approach to diversification through a single investment vehicle.

Growth Info

Historically, the portfolio has delivered a compound annual growth rate (CAGR) of 5.14%, indicating steady, if unspectacular, growth. The maximum drawdown of -42.51% highlights the potential for significant short-term losses, which is a critical consideration for risk-averse investors. The concentration of returns in just a few days suggests that the portfolio's performance may be driven by occasional, significant market movements. Investors should be prepared for periods of volatility, understanding that past performance does not guarantee future results.

Projection Info

Using Monte Carlo simulations, the portfolio's future performance is projected with a range of potential outcomes. The simulations suggest a median outcome of 82.62% growth, with a 5% chance of a -20.1% loss and a 67% chance of achieving 123.6% growth. These projections provide a probabilistic view of future returns, helping investors understand the range of possible outcomes. However, it's important to note that these simulations are based on historical data and assumptions, which may not fully capture future market conditions.

Asset classes Info

  • Stocks
    49%
  • Bonds
    45%
  • Other
    6%
  • No data
    6%

The allocation across asset classes is fairly balanced, with a significant portion in stocks and bonds. This mix aims to provide growth potential while generating income and managing risk. The allocation to "Other" and "NotClassified" categories, although small, suggests some exposure to alternative investments, which can enhance diversification. This balance is beneficial for investors seeking both capital appreciation and income, but it's essential to regularly review the asset mix to ensure it aligns with changing market conditions and personal investment goals.

Sectors Info

  • Health Care
    21%
  • Real Estate
    19%
  • Technology
    16%
  • Utilities
    10%
  • Energy
    9%
  • Industrials
    9%
  • Financials
    6%
  • Consumer Discretionary
    4%
  • Telecommunications
    4%
  • Consumer Staples
    2%
  • Basic Materials
    1%

Sector diversification is a strong feature of this portfolio, with significant exposure to healthcare, real estate, and technology. Each of these sectors offers unique growth opportunities and risks, contributing to the portfolio's overall balance. The presence of smaller allocations to various other sectors further enhances diversification. However, investors should remain aware of sector-specific risks, such as regulatory changes in healthcare or technological disruptions, and consider adjusting allocations as needed to maintain a balanced risk profile.

Regions Info

  • North America
    71%
  • Europe Developed
    16%
  • Asia Developed
    4%
  • Asia Emerging
    3%
  • Japan
    3%
  • Australasia
    2%
  • Latin America
    1%

Geographically, the portfolio is heavily weighted towards North America, with over 70% exposure, followed by Europe Developed. This concentration provides stability and familiarity for U.S.-based investors but may limit exposure to high-growth regions. The smaller allocations to emerging markets, Asia, and other regions offer some diversification benefits, potentially enhancing returns through exposure to diverse economic cycles. Investors seeking greater international diversification might consider increasing allocations to underrepresented regions to capture global growth opportunities.

Dividends Info

  • Amplify High Income ETF 10.80%
  • Weighted yield (per year) 10.80%

With a total dividend yield of 10.8%, the portfolio provides a substantial income stream, appealing to income-focused investors. This yield can help cushion the impact of market volatility by providing regular cash flow. However, high yields can sometimes indicate higher risk, so it's important to assess the sustainability of these dividends. Investors should monitor the underlying assets' performance and payout policies to ensure that the income component remains reliable over time.

Ongoing product costs Info

  • Amplify High Income ETF 4.60%
  • Weighted costs total (per year) 4.60%

The portfolio's total expense ratio (TER) of 4.6% is relatively high, which could erode returns over time. High costs can significantly impact long-term performance, especially in a low-return environment. Investors should consider whether the potential benefits of the ETF, such as diversification and income, justify these costs. Exploring alternative investment options with lower fees could enhance net returns, making cost management an important aspect of portfolio optimization.

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