A balanced and highly diversified portfolio with strong sector representation and moderate risk exposure

Report created on Feb 6, 2025

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 of 12 equally weighted ETFs, each holding 8.33% of the total allocation. This structure provides a balanced approach, ensuring no single ETF dominates the portfolio. Compared to a typical benchmark, this portfolio is highly diversified across various sectors and regions. This composition helps mitigate risk by spreading exposure across different asset types. For further optimization, consider reviewing the allocation periodically to ensure it aligns with evolving investment goals and market conditions.

Growth Info

Historically, the portfolio has performed well, achieving a Compound Annual Growth Rate (CAGR) of 16.35%. This indicates strong growth over time compared to typical benchmark returns. However, it's important to note that past performance is not indicative of future results. The maximum drawdown of -12.33% suggests moderate risk, which aligns with the balanced risk classification. To maintain this performance, continue monitoring market conditions and adjust the portfolio as necessary to capitalize on emerging opportunities.

Projection Info

Monte Carlo simulations project potential future outcomes using historical data. With 1,000 simulations, the portfolio shows promising results, with a median (50th percentile) return of 614.0%. It's important to remember that these simulations are based on historical data and assumptions, and actual future performance may vary. The simulations indicate a high probability of positive returns, which supports the portfolio's balanced risk classification. Regularly review these projections to ensure they align with your investment goals.

Asset classes Info

  • Stocks
    92%
  • Other
    8%

The portfolio is heavily weighted towards stocks, making up 92% of the allocation, with the remaining 8% in other asset classes. This stock-heavy allocation can drive growth but also introduces volatility. Compared to a typical benchmark, this allocation is aggressive, emphasizing growth over stability. To enhance diversification, consider incorporating other asset classes, such as bonds or real estate, which may offer stability during market downturns and reduce overall portfolio risk.

Sectors Info

  • Financials
    26%
  • Industrials
    15%
  • Technology
    14%
  • Energy
    11%
  • Consumer Discretionary
    9%
  • Telecommunications
    4%
  • Consumer Staples
    3%
  • Health Care
    3%
  • Basic Materials
    2%
  • Utilities
    2%
  • Real Estate
    1%

The sector allocation is diverse, with financial services (26%), industrials (15%), and technology (14%) leading the way. This sectoral spread aligns well with common benchmarks, providing exposure to various economic cycles. However, the high concentration in financial services may increase sensitivity to interest rate changes. To balance this, consider slightly increasing exposure to underrepresented sectors like healthcare or utilities, which can offer defensive characteristics during market volatility.

Regions Info

  • North America
    62%
  • Japan
    10%
  • Europe Developed
    7%
  • Asia Emerging
    4%
  • Asia Developed
    4%
  • Africa/Middle East
    2%
  • Latin America
    1%
  • Australasia
    1%

The portfolio's geographic exposure is predominantly in North America (62%), with notable allocations in Japan (10%) and Europe Developed (7%). This regional focus aligns with common benchmarks but may limit exposure to growth opportunities in emerging markets. To enhance geographic diversification, consider increasing allocations to regions like Asia Emerging or Latin America, which may offer growth potential and reduce reliance on North American markets.

Market capitalization Info

  • Large-cap
    33%
  • Mid-cap
    24%
  • Mega-cap
    22%
  • Small-cap
    10%
  • No data
    8%
  • Micro-cap
    2%

The portfolio's market capitalization allocation is well-distributed, with big (33%), medium (24%), and mega (22%) cap stocks taking the lead. This distribution provides a balanced exposure to various company sizes, which can help mitigate risk. However, the relatively low allocation to small (10%) and micro (2%) caps may limit potential high-growth opportunities. To capture more growth, consider increasing the allocation to smaller-cap stocks, which can offer higher returns but also come with increased volatility.

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 shows potential for optimization using the Efficient Frontier, which seeks the best possible risk-return ratio by adjusting asset allocations. This approach focuses on maximizing returns for a given level of risk, based on historical data. While the portfolio is already well-diversified, fine-tuning the allocation among existing assets could enhance efficiency. Regularly review the portfolio's positioning on the Efficient Frontier to ensure it remains aligned with risk tolerance and investment objectives.

Dividends Info

  • WisdomTree Japan Hedged Equity Fund 0.90%
  • SPDR® S&P Emerging Markets Dividend ETF 3.90%
  • iShares U.S. Broker-Dealers & Securities Exchanges ETF 1.00%
  • SPDR® S&P Capital Markets ETF 1.10%
  • Legg Mason International Low Volatility High Dividend ETF 4.80%
  • Global X MLP & Energy Infrastructure ETF 4.00%
  • Simplify Interest Rate Hedge ETF 3.50%
  • Invesco Aerospace & Defense ETF 0.60%
  • VanEck Semiconductor ETF 0.40%
  • SPDR® S&P Homebuilders ETF 0.60%
  • Weighted yield (per year) 1.73%

The portfolio's total dividend yield stands at 1.73%, with higher yields from ETFs like Legg Mason International Low Volatility High Dividend ETF (4.80%). Dividends can provide a steady income stream and contribute to total returns, especially in volatile markets. For investors seeking income, this yield is moderate but could be improved by increasing exposure to high-dividend ETFs. However, it's crucial to balance yield with growth potential to avoid compromising long-term capital appreciation.

Ongoing product costs Info

  • WisdomTree Japan Hedged Equity Fund 0.48%
  • SPDR® S&P Emerging Markets Dividend ETF 0.49%
  • iShares U.S. Broker-Dealers & Securities Exchanges ETF 0.40%
  • iShares Gold Trust 0.25%
  • SPDR® S&P Capital Markets ETF 0.35%
  • Legg Mason International Low Volatility High Dividend ETF 0.40%
  • Global X MLP & Energy Infrastructure ETF 0.45%
  • Simplify Interest Rate Hedge ETF 0.50%
  • Invesco Aerospace & Defense ETF 0.58%
  • Pacer Trendpilot US Large Cap ETF 0.60%
  • VanEck Semiconductor ETF 0.35%
  • SPDR® S&P Homebuilders ETF 0.35%
  • Weighted costs total (per year) 0.43%

The portfolio's Total Expense Ratio (TER) is 0.43%, which is competitive and supports better long-term performance by minimizing costs. Lower costs can enhance net returns, especially over extended investment horizons. Compared to industry averages, this cost structure is favorable, indicating efficient management. To maintain this advantage, continue monitoring ETF expenses and consider switching to lower-cost alternatives if available, ensuring that cost savings do not compromise the portfolio's overall strategy.

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