A balanced portfolio with strong U.S. focus and moderate risk exposure

Report created on Mar 23, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio consists of six ETFs, with a significant 40% allocation to the Vanguard S&P 500 ETF. This is complemented by a 20% allocation to the Invesco NASDAQ 100 ETF and 15% to the Schwab U.S. Large-Cap Growth ETF. The remaining 25% is distributed among international and dividend-focused ETFs. This composition leans heavily towards large-cap U.S. equities, which aligns with many benchmarks. However, the portfolio could benefit from a more diversified mix of asset classes to reduce risk and enhance returns over time.

Growth Info

The portfolio has delivered a commendable Compound Annual Growth Rate (CAGR) of 12.48%, which is impressive. This performance is above average compared to many market benchmarks. However, it also experienced a maximum drawdown of -27.75%, indicating potential volatility. It's important to note that past performance does not guarantee future results. To enhance resilience, consider diversifying further to mitigate such drawdowns, especially during market downturns.

Projection Info

Using a Monte Carlo simulation with 1,000 iterations, the portfolio's future projections show a wide range of possible outcomes. The median (50th percentile) suggests a potential growth of 312%, but this is based on historical data, which has limitations. While 97.9% of simulations resulted in positive returns, it’s crucial to remember that these are probabilistic estimates. To manage expectations, consider periodic reviews and adjustments to maintain alignment with your financial goals.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio is heavily weighted towards stocks, with 99% in equities and only 1% in cash. This allocation is typical for growth-focused strategies but may expose the portfolio to higher volatility. In comparison to benchmarks, this lack of diversification into other asset classes like bonds or real estate could be a risk during market downturns. To enhance stability, consider incorporating a small percentage of fixed-income or alternative investments.

Sectors Info

  • Technology
    34%
  • Financials
    12%
  • Consumer Discretionary
    12%
  • Telecommunications
    11%
  • Health Care
    9%
  • Industrials
    7%
  • Consumer Staples
    6%
  • Energy
    3%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    1%

The portfolio is tech-heavy, with a 34% allocation to the technology sector. This concentration can lead to higher volatility, especially during periods of rising interest rates. Other sectors like financial services and consumer cyclicals each make up 12% of the portfolio, providing some diversification. However, to reduce sector-specific risks, consider rebalancing towards a more even sector distribution, aligning with broader market indices.

Regions Info

  • North America
    80%
  • Asia Emerging
    8%
  • Europe Developed
    5%
  • Asia Developed
    3%
  • Japan
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is concentrated in North America, accounting for 80% of the allocation. This heavy U.S. focus may limit exposure to global growth opportunities, particularly in emerging markets. While this has been beneficial in recent years, diversification into other regions like Europe or Asia could enhance growth potential and reduce regional risk. Consider increasing international exposure to balance the geographic allocation.

Market capitalization Info

  • Mega-cap
    49%
  • Large-cap
    34%
  • Mid-cap
    16%
  • Small-cap
    1%

The portfolio is predominantly invested in mega and big-cap stocks, which together represent 83% of the allocation. This focus can offer stability and lower volatility but may limit growth potential compared to smaller-cap stocks. While large-cap stocks are generally more stable, introducing more mid and small-cap equities could provide additional growth opportunities. Consider gradually increasing exposure to smaller market caps for enhanced diversification.

Redundant positions Info

  • Invesco NASDAQ 100 ETF
    Schwab U.S. Large-Cap Growth ETF
    High correlation

The portfolio contains highly correlated assets, particularly the Invesco NASDAQ 100 ETF and Schwab U.S. Large-Cap Growth ETF. High correlation means these assets tend to move in the same direction, which can reduce diversification benefits. During market downturns, this could amplify losses. To optimize diversification, consider replacing one of these ETFs with an asset that has a lower correlation to the rest of the portfolio.

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 could potentially be optimized using the Efficient Frontier, which seeks the best possible risk-return ratio. However, before optimizing, it's crucial to address the high correlation between certain assets. Adjusting allocations to reduce overlap and introduce more diverse asset classes can improve efficiency. Remember, optimization is based on current assets and doesn't guarantee diversification or other investment goals.

Dividends Info

  • Invesco NASDAQ 100 ETF 0.50%
  • Schwab U.S. Dividend Equity ETF 2.80%
  • Schwab U.S. Large-Cap Growth ETF 0.30%
  • Vanguard FTSE All-World ex-US Index Fund ETF Shares 2.70%
  • Vanguard S&P 500 ETF 1.00%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 3.00%
  • Weighted yield (per year) 1.26%

The portfolio's overall dividend yield is 1.26%, primarily driven by the Schwab U.S. Dividend Equity ETF and the Vanguard FTSE Emerging Markets Index Fund ETF Shares. While dividends can provide a steady income stream, this yield is relatively modest. For investors seeking higher income, consider increasing allocations to high-dividend ETFs. However, balance this with growth objectives to maintain a diversified approach.

Ongoing product costs Info

  • Invesco NASDAQ 100 ETF 0.15%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Vanguard FTSE All-World ex-US Index Fund ETF Shares 0.07%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard FTSE Emerging Markets 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%, which is excellent for long-term performance. Lower costs mean more of your returns stay in your pocket, compounding over time. This efficient cost structure aligns well with best practices in portfolio management. Continue to monitor expense ratios and consider cost-effective options when rebalancing or adding new investments to maintain this advantage.

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