A balanced portfolio with strong bond allocation and concentrated technology exposure

Report created on Dec 27, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

1/5
Single-Focused
Less diversification More diversification

Positions

The portfolio is structured with a significant allocation to bonds at around 34%, providing a stable income source and reducing overall volatility. Equities make up nearly 50%, offering growth potential, while gold contributes approximately 16%, acting as a hedge against inflation and market downturns. Compared to common benchmarks, this composition leans towards a conservative growth strategy with a focus on income stability. To enhance diversification, consider adding more varied asset types, such as international equities or alternative investments, which can provide additional growth opportunities and risk management.

Growth Info

Historically, the portfolio has achieved a Compound Annual Growth Rate (CAGR) of 9.59%, reflecting a solid performance over time. However, it experienced a maximum drawdown of -27.07%, indicating vulnerability during market downturns. When compared to benchmarks like the S&P 500, which has a similar long-term growth rate, this portfolio offers a balanced risk-return profile. To mitigate future drawdowns, consider adjusting the portfolio's equity exposure, especially in volatile sectors, to align with your risk tolerance and investment goals.

Projection Info

Forward projections using Monte Carlo simulations suggest a wide range of potential outcomes, with the 50th percentile indicating a 158.7% return. This method uses historical data to simulate future performance, but it's important to note that these projections are not guarantees. The portfolio's expected annualized return from simulations is 38.19%, which suggests optimism. However, to better manage risk, consider regularly reviewing asset allocations and making adjustments based on market conditions and personal financial objectives.

Asset classes Info

  • Stocks
    50%
  • Bonds
    34%
  • Other
    16%

The portfolio's asset allocation includes stocks (about 50%), bonds (34%), and gold (16%), with minimal cash holdings. This mix provides a balance between growth and income, but the heavy reliance on bonds and gold may limit growth potential compared to more stock-heavy portfolios. To enhance diversification and growth potential, consider increasing exposure to equities, particularly in sectors or regions not currently represented. This strategy can help balance risk and return more effectively over the long term.

Sectors Info

  • Technology
    16%
  • Consumer Discretionary
    9%
  • Financials
    6%
  • Telecommunications
    4%
  • Health Care
    4%
  • Energy
    3%
  • Industrials
    3%
  • Consumer Staples
    2%
  • Basic Materials
    1%
  • Utilities
    1%

Sector-wise, the portfolio is heavily weighted towards technology at over 16%, followed by consumer cyclicals and financial services. This concentration in technology could lead to higher volatility, especially during periods of interest rate changes or tech market downturns. While this aligns with growth objectives, diversifying into less represented sectors like healthcare or utilities can provide stability and reduce risk. Ensuring a balanced sector allocation can help mitigate sector-specific risks and enhance overall portfolio resilience.

Regions Info

  • North America
    50%

Geographic exposure is predominantly in North America, accounting for nearly 50% of the portfolio, with minimal allocations to Europe and Asia. This concentration may limit diversification benefits and expose the portfolio to regional economic risks. To enhance geographic diversification, consider increasing exposure to international markets, which can provide access to different economic cycles and growth opportunities. This strategy can help balance risk and improve potential returns by capturing global market trends.

Redundant positions Info

  • Schwab U.S. Large-Cap Growth ETF
    Vanguard S&P 500 ETF
    High correlation

The portfolio contains highly correlated assets, such as the Schwab U.S. Large-Cap Growth ETF and the Vanguard S&P 500 ETF. High correlation means these assets tend to move together, which can limit diversification benefits during market downturns. To enhance diversification, consider replacing some of these overlapping assets with less correlated ones, which can provide better risk management and improve the portfolio's overall resilience. Reducing correlation can help achieve a more balanced risk-return profile.

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 suggests a more efficient portfolio with a similar risk level could yield returns of 35.46%. This optimization focuses on the best possible risk-return ratio, not necessarily diversification. To achieve this, consider reallocating assets to reduce correlation and enhance potential returns. Regular reviews and adjustments based on market conditions and personal goals can help maintain an optimized portfolio that aligns with your risk tolerance and investment objectives.

Dividends Info

  • Apple Inc 0.40%
  • Vanguard Long-Term Bond Index Fund ETF Shares 4.70%
  • Chevron Corp 4.50%
  • Alphabet Inc Class A 0.30%
  • Morgan Stanley 2.80%
  • Microsoft Corporation 0.70%
  • Schwab U.S. Dividend Equity ETF 3.60%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Vanguard S&P 500 ETF 1.20%
  • Weighted yield (per year) 2.33%

The portfolio's dividend yield stands at 2.33%, with significant contributions from the Vanguard Long-Term Bond Index Fund and the Schwab U.S. Dividend Equity ETF. Dividends provide a steady income stream, which is beneficial for income-focused investors. However, if growth is a primary goal, consider balancing dividend-paying assets with growth-focused stocks. This approach can help achieve a mix of income and capital appreciation, aligning with both short-term income needs and long-term growth objectives.

Ongoing product costs Info

  • Vanguard Long-Term Bond Index Fund ETF Shares 0.04%
  • SPDR® Gold Shares 0.40%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.09%

The portfolio's total expense ratio (TER) is a low 0.09%, which is favorable for long-term performance as lower costs mean more returns stay in your pocket. This efficient cost structure is aligned with best practices in portfolio management. However, always be vigilant about potential hidden fees or changes in fund expenses. Regularly reviewing and comparing fund costs can ensure that your portfolio remains cost-effective, maximizing net returns over time.

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