A balanced portfolio with strong tech exposure and moderate international diversification

Report created on Feb 3, 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 features a well-rounded mix of ETFs and a small allocation to individual stocks. With 97% in stocks, it leans heavily toward equities, which is common for growth-focused portfolios. The total expense ratio (TER) of 0.15% is impressively low, enhancing long-term returns. Compared to benchmarks, such as the S&P 500, this portfolio is more diversified globally. However, it could benefit from a slight increase in non-equity assets for better risk management. Consider adding fixed-income investments to reduce volatility and enhance stability.

Growth Info

Historically, the portfolio has performed well, with a compound annual growth rate (CAGR) of 14.31%. This indicates strong growth potential, outperforming many benchmarks. However, it has experienced a notable max drawdown of -17.80%, highlighting its vulnerability during market downturns. While past performance is not indicative of future results, this historical data can guide expectations. To mitigate potential losses, consider strategies like diversification across asset classes or hedging.

Projection Info

The Monte Carlo simulation, which uses historical data to model potential future outcomes, predicts a wide range of returns. The median projection is a 524.8% increase, but there's a 5% chance of only a 64.7% gain. It's important to note that these simulations are based on past data and assumptions, which may not hold true. To prepare for various scenarios, regularly review your portfolio's performance and adjust allocations as needed, keeping an eye on economic trends.

Asset classes Info

  • Stocks
    97%
  • No data
    2%
  • Cash
    1%

The portfolio is dominated by equities, with 97% in stocks. While this aligns with growth objectives, it limits diversification benefits across asset classes. Compared to a balanced benchmark, this portfolio lacks fixed-income and alternative assets. Adding bonds or real estate could enhance stability and provide income during market volatility. A more diverse asset allocation can improve risk-adjusted returns, especially in uncertain economic times.

Sectors Info

  • Technology
    32%
  • Consumer Discretionary
    14%
  • Telecommunications
    12%
  • Financials
    12%
  • Industrials
    7%
  • Health Care
    7%
  • Consumer Staples
    5%
  • Basic Materials
    3%
  • Energy
    3%
  • Utilities
    2%
  • Real Estate
    2%

The portfolio's sector allocation heavily favors technology at 32%, which is higher than typical benchmarks. This concentration can lead to increased volatility, especially during tech market corrections. While tech has driven recent growth, consider balancing with sectors like healthcare or consumer staples to mitigate risk. A more even sector distribution could provide smoother returns and reduce exposure to sector-specific downturns.

Regions Info

  • North America
    65%
  • Asia Emerging
    16%
  • Europe Developed
    8%
  • Asia Developed
    4%
  • Japan
    3%
  • Africa/Middle East
    2%
  • Latin America
    1%
  • Australasia
    1%

Geographically, the portfolio is predominantly North American at 65%, with some exposure to Asia and Europe. This aligns with many global benchmarks but may miss opportunities in emerging markets. While the U.S. market has been strong, diversifying into underrepresented regions could enhance growth potential and reduce regional risk. Consider increasing allocations to emerging markets or Europe to capitalize on global economic shifts.

Market capitalization Info

  • Mega-cap
    53%
  • Large-cap
    31%
  • Mid-cap
    12%
  • Small-cap
    1%

The portfolio is skewed towards mega-cap stocks at 53%, offering stability but potentially limiting growth. While large companies provide reliable returns, smaller caps can offer higher growth potential. Compared to benchmarks, this portfolio could benefit from increased exposure to mid and small-cap stocks. Balancing market caps can boost diversification and capture opportunities across different economic cycles.

Redundant positions Info

  • Vanguard S&P 500 ETF
    Invesco NASDAQ 100 ETF
    Schwab U.S. Large-Cap Growth ETF
    JPMorgan Nasdaq Equity Premium Income ETF
    High correlation

The portfolio contains highly correlated assets, particularly among U.S. large-cap ETFs. This limits diversification benefits, as these assets tend to move together. During market downturns, this correlation can increase risk. To enhance diversification, consider reducing overlapping positions and adding uncorrelated assets. This strategy can improve the portfolio's resilience and optimize risk-adjusted returns.

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.

Optimizing this portfolio involves aligning it with the Efficient Frontier, which balances risk and return. Currently, the high correlation among assets suggests limited diversification benefits. By adjusting allocations, particularly among overlapping ETFs, the portfolio can achieve a better risk-return ratio. This doesn't mean adding more assets but reallocating existing ones for efficiency. Regularly review and adjust to maintain optimal balance.

Dividends Info

  • iShares MSCI BIC ETF 0.40%
  • Alphabet Inc Class A 0.30%
  • iShares MSCI India ETF 0.80%
  • JPMorgan Nasdaq Equity Premium Income ETF 8.90%
  • Invesco NASDAQ 100 ETF 0.60%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 3.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.20%
  • Weighted yield (per year) 2.24%

With a total dividend yield of 2.24%, this portfolio provides a reasonable income stream. The JPMorgan Nasdaq Equity Premium Income ETF contributes significantly with an 8.90% yield. Dividends can offer stability and income during market volatility, complementing growth-focused strategies. For those seeking higher income, consider increasing allocations to dividend-focused ETFs or stocks, balancing with growth assets.

Ongoing product costs Info

  • iShares MSCI BIC ETF 0.70%
  • iShares MSCI India ETF 0.65%
  • JPMorgan Nasdaq Equity Premium Income ETF 0.35%
  • Invesco NASDAQ 100 ETF 0.15%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 0.08%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.15%

The portfolio's costs are low, with a total expense ratio of 0.15%. This is a positive aspect, as lower fees enhance net returns over time. The majority of ETFs have TERs below 0.10%, which is competitive. However, the iShares MSCI BIC ETF and iShares MSCI India ETF have higher fees. Regularly review these costs and consider alternatives with similar exposure but lower expenses to maximize returns.

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