A balanced portfolio with strong U.S. focus and moderate risk for steady growth

Report created on Mar 28, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

The portfolio consists of two ETFs: Schwab U.S. Dividend Equity ETF at 60% and Schwab U.S. Large-Cap ETF at 40%. This composition is heavily weighted towards U.S. equities, which may limit diversification. A more balanced portfolio typically includes a wider variety of asset types, such as bonds or international equities. This concentration in U.S. stocks could expose the portfolio to increased market-specific risks. To enhance diversification, consider incorporating other asset classes or regions, which can help mitigate potential downturns in U.S. markets.

Growth Info

With a Compound Annual Growth Rate (CAGR) of 13.31%, the portfolio has demonstrated strong historical performance. This growth rate indicates how much the investment has grown on average each year, akin to calculating the speed of a car over a long road trip. However, it's important to note that past performance doesn't guarantee future results. The maximum drawdown of -33.53% suggests significant volatility, meaning the portfolio has experienced substantial declines in value. Monitoring market conditions and adjusting allocations as needed can help manage potential risks.

Projection Info

The Monte Carlo simulation, which uses historical data to project potential outcomes, shows a promising outlook for the portfolio. With 1,000 simulations, the 50th percentile projects a 474.2% increase, indicating a favorable median outcome. However, it's essential to remember that these simulations are based on past data and do not guarantee future performance. Given the strong projected returns, maintaining the current allocation could be beneficial, but staying informed about market trends and being ready to adjust as needed is prudent.

Asset classes Info

  • Stocks
    100%

The portfolio is entirely composed of stocks, which limits diversification benefits typically provided by including other asset classes like bonds or real estate. This single asset class focus can lead to increased volatility, especially during stock market downturns. Diversification across various asset classes can help balance risk and improve stability. Consider integrating a mix of bonds or alternative investments to reduce potential volatility and enhance overall portfolio resilience.

Sectors Info

  • Technology
    19%
  • Financials
    16%
  • Health Care
    15%
  • Consumer Staples
    11%
  • Consumer Discretionary
    10%
  • Industrials
    10%
  • Energy
    9%
  • Telecommunications
    7%
  • Basic Materials
    2%
  • Utilities
    1%
  • Real Estate
    1%

The portfolio's sector allocation shows a significant concentration in Technology (19%), Financial Services (16%), and Healthcare (15%). This composition aligns with common benchmarks but may lead to higher volatility, especially in sectors sensitive to economic changes. A more evenly distributed sector allocation could help mitigate sector-specific risks. Regularly reviewing sector performance and trends can guide adjustments to maintain a balanced exposure that aligns with market conditions.

Regions Info

  • North America
    99%
  • Europe Developed
    1%

With 99% of assets in North America, the portfolio is heavily skewed towards the U.S. market, limiting geographic diversification. This concentration could expose the portfolio to regional economic risks. Including international equities, particularly from Europe or emerging markets, can provide diversification benefits and reduce dependency on the U.S. economy. Expanding geographic exposure can help capture growth opportunities in other regions and balance potential regional downturns.

Market capitalization Info

  • Large-cap
    53%
  • Mid-cap
    24%
  • Mega-cap
    17%
  • Small-cap
    4%
  • Micro-cap
    1%

The portfolio's allocation by market capitalization is predominantly in Big (53%) and Medium (24%) companies, with limited exposure to Small (4%) and Micro (1%) caps. This distribution favors stability and established growth but may miss out on potential high-growth opportunities from smaller companies. A more balanced market cap allocation could enhance diversification and capture growth from smaller, innovative companies. Consider increasing exposure to small and micro-cap stocks to broaden potential return sources.

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 benefit from optimization using the Efficient Frontier, which identifies the best possible risk-return ratio based on current assets. This approach focuses on maximizing returns for a given level of risk. By adjusting the allocation between the Schwab U.S. Dividend Equity ETF and the Schwab U.S. Large-Cap ETF, the portfolio's efficiency can be improved. Regularly assessing the portfolio's position on the Efficient Frontier can help ensure optimal risk-return balance.

Dividends Info

  • Schwab U.S. Dividend Equity ETF 2.90%
  • Schwab U.S. Large-Cap ETF 1.20%
  • Weighted yield (per year) 2.22%

The portfolio's total dividend yield of 2.22% provides a steady income stream, with the Schwab U.S. Dividend Equity ETF contributing 2.90% and the Schwab U.S. Large-Cap ETF 1.20%. Dividends can be an important component of total returns, especially for investors seeking regular income. While the current yield is modest, reinvesting dividends can compound growth over time. Monitoring dividend policies and yields can help ensure the portfolio continues to meet income objectives.

Ongoing product costs Info

  • Schwab U.S. Dividend Equity ETF 0.06%
  • Schwab U.S. Large-Cap ETF 0.03%
  • Weighted costs total (per year) 0.05%

The portfolio's total expense ratio (TER) is impressively low at 0.05%, with the Schwab U.S. Dividend Equity ETF at 0.06% and the Schwab U.S. Large-Cap ETF at 0.03%. Low costs are beneficial for long-term performance, as they reduce the drag on returns. Keeping expenses minimal allows more of the portfolio's returns to compound over time. Regularly reviewing and comparing expense ratios across similar ETFs can ensure cost-efficiency is maintained.

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