Balanced portfolio with strong U.S. focus and moderate diversification

Report created on Apr 10, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

This portfolio is composed of 90% stocks and 10% bonds, with a significant tilt towards U.S. equities. It includes a mix of growth and dividend-focused ETFs, providing exposure to both capital appreciation and income generation. The allocation is moderately diversified but leans heavily on domestic markets. Compared to a typical balanced benchmark, this portfolio has a greater emphasis on equities, which may appeal to investors comfortable with more risk for potentially higher returns. To enhance diversification, consider a broader mix of asset classes, such as adding more international stocks or alternative investments.

Growth Info

Historically, the portfolio has delivered an impressive CAGR of 11.31%, indicating strong growth over time. However, it has also experienced a maximum drawdown of -31.57%, highlighting potential volatility. This performance is comparable to leading benchmarks, suggesting the portfolio has captured market gains effectively. While past performance is no guarantee of future results, it provides a useful context for assessing risk and return expectations. Investors should be prepared for periods of volatility and consider their risk tolerance when evaluating these historical trends.

Projection Info

Monte Carlo simulations, which use historical data to model potential future outcomes, indicate an annualized return of 8.38% for this portfolio. With 955 out of 1,000 simulations showing positive returns, the outlook appears favorable. However, the 5th percentile projection suggests a potential downside of 2.8%, illustrating the inherent uncertainty in forecasting. While simulations offer valuable insights, they are not foolproof and should be complemented with other analyses. Investors should use these projections to guide expectations but remain flexible in adjusting strategies as market conditions evolve.

Asset classes Info

  • Stocks
    90%
  • Bonds
    10%
  • Cash
    1%

The portfolio is predominantly allocated to stocks (90%), with a small portion in bonds (10%). This allocation aligns with a growth-focused strategy, potentially offering higher returns but also increased volatility. Compared to a typical balanced benchmark, the portfolio's higher equity exposure could lead to greater fluctuations in value. To enhance diversification and mitigate risk, consider incorporating more fixed-income or alternative assets. This could provide a buffer during market downturns and contribute to a more stable return profile over time.

Sectors Info

  • Technology
    25%
  • Financials
    13%
  • Health Care
    11%
  • Consumer Discretionary
    10%
  • Industrials
    8%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    2%
  • Real Estate
    2%
  • Utilities
    1%

Sectorally, the portfolio is heavily weighted towards technology (25%), followed by financial services (13%) and healthcare (11%). This concentration in tech may lead to higher volatility, especially during interest rate fluctuations. Compared to common benchmarks, the sector allocation is relatively aligned, but the tech focus could pose risks if the sector underperforms. To achieve a more balanced sector exposure, consider diversifying into less-represented sectors like utilities or real estate. This could help stabilize returns and reduce sector-specific risks.

Regions Info

  • North America
    80%
  • Europe Developed
    4%
  • Asia Emerging
    2%
  • Japan
    2%
  • Asia Developed
    1%

Geographically, the portfolio is heavily skewed towards North America (80%), with minimal exposure to other regions. This concentration may limit diversification benefits and increase vulnerability to U.S. market fluctuations. Compared to global benchmarks, the portfolio's geographic allocation is less diversified. To enhance global exposure, consider increasing investments in emerging markets or other developed regions. This could provide opportunities for growth and help mitigate risks associated with over-reliance on the U.S. market.

Market capitalization Info

  • Mega-cap
    34%
  • Large-cap
    33%
  • Mid-cap
    17%
  • Small-cap
    4%
  • Micro-cap
    1%

The portfolio's market capitalization distribution is concentrated in mega (34%) and big (33%) companies, with limited exposure to small (4%) and micro (1%) caps. This focus on larger companies may offer stability but could limit growth potential. Compared to benchmarks, the allocation is somewhat skewed towards large caps. To capture potential gains from smaller, more agile companies, consider increasing exposure to mid and small-cap stocks. This could enhance diversification and provide opportunities for long-term growth.

Redundant positions Info

  • Schwab U.S. Large-Cap Growth ETF
    Vanguard Total Stock Market Index Fund ETF Shares
    High correlation

The portfolio includes highly correlated assets, particularly the Schwab U.S. Large-Cap Growth ETF and the Vanguard Total Stock Market Index Fund ETF Shares. High correlation means these assets tend to move together, reducing diversification benefits. During market downturns, this could amplify losses. To improve diversification, consider replacing one of these ETFs with assets that have lower correlation to the rest of the portfolio. This could help manage risk and provide a more balanced return profile across different market conditions.

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.

Click on the colored dots to explore allocations.

The portfolio can be optimized using the Efficient Frontier, which seeks the best possible risk-return ratio. This optimization focuses on reallocating existing assets to achieve maximum efficiency, rather than adding new investments. By adjusting the weightings, the portfolio could potentially achieve higher returns for the same level of risk, or maintain current returns with reduced risk. It's important to note that optimization is based on historical data and assumptions, which may not fully predict future market conditions. Regular reviews and adjustments are recommended to maintain optimal performance.

Dividends Info

  • Vanguard Total Bond Market Index Fund ETF Shares 3.40%
  • Schwab U.S. Dividend Equity ETF 4.00%
  • Schwab U.S. Large-Cap Growth ETF 0.50%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.40%
  • Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares 2.60%
  • Vanguard Total International Stock Index Fund ETF Shares 3.30%
  • Weighted yield (per year) 2.09%

The portfolio's overall dividend yield is 2.09%, with the Schwab U.S. Dividend Equity ETF contributing significantly at 4.00%. Dividends provide a steady income stream, which can be particularly appealing in volatile markets. Compared to a typical growth-focused portfolio, this yield is relatively attractive. However, for investors focused on income, exploring additional high-dividend assets could enhance cash flow. Balancing growth and income objectives is key, ensuring that dividend yields align with the investor's financial goals.

Ongoing product costs Info

  • Vanguard Total Bond Market Index Fund ETF Shares 0.03%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares 0.04%
  • Vanguard Total International Stock Index Fund ETF Shares 0.05%
  • Weighted costs total (per year) 0.04%

The portfolio's total expense ratio (TER) is impressively low at 0.04%, which is beneficial for long-term returns. Low costs mean more of your investment returns stay in your pocket, compounding over time. Compared to industry averages, this cost structure is highly competitive, supporting better performance. Maintaining a focus on cost-effective investment options is crucial, as even small differences in fees can significantly impact net returns over the long term. Regularly reviewing and optimizing costs can contribute to achieving financial goals more efficiently.

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