A balanced portfolio with strong U.S. focus and emerging markets exposure

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

What type of investor this portfolio is suitable for

Balanced Investors

This portfolio suits an investor with a balanced risk tolerance, seeking growth with moderate volatility. It is ideal for individuals with a long-term horizon who are comfortable with market fluctuations. The focus on U.S. equities and emerging markets provides opportunities for capital appreciation, while the bond allocation offers some stability. This investor values diversification and is open to adjusting their strategy to adapt to changing market conditions, ensuring their portfolio remains aligned with their financial goals.

Positions

  • iShares Core S&P 500 ETF
    IVV - US4642872000
    22.38%
  • VANGUARD EMERGING MARKETS STOCK INDEX FUND INVESTOR SHARES
    VEIEX - US9220423043
    19.86%
  • Vanguard Small-Cap Index Fund ETF Shares
    VB - US9229087518
    11.72%
  • Invesco S&P 500® Quality ETF
    SPHQ - US46137V2410
    10.92%
  • Invesco S&P 500® Momentum ETF
    SPMO - US46138E3392
    10.80%
  • Vanguard Total Bond Market Index Fund ETF Shares
    BND - US9219378356
    9.97%
  • Schwab U.S. Large-Cap Growth ETF
    SCHG - US8085243009
    6.86%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares
    VWO - US9220428588
    4.36%
  • SPDR® Portfolio S&P 500 ETF
    SPLG - US78464A8541
    3.13%

This portfolio is composed of 89% stocks and 10% bonds, with a small cash allocation. It includes a mix of ETFs and mutual funds, predominantly focusing on large-cap U.S. equities and emerging markets. The portfolio's composition leans towards equities, which aligns with the balanced risk classification. This structure provides a solid foundation for growth, while the bond allocation offers some stability. To enhance diversification, consider increasing exposure to other asset classes like real estate or commodities, which may reduce risk and improve long-term returns.

Growth Info

Historically, the portfolio has delivered a CAGR of 12.94%, which is commendable. However, it experienced a maximum drawdown of -31.01%, indicating significant volatility during market downturns. Comparing this to a benchmark like the S&P 500, the performance is relatively strong, though the drawdown suggests a need for risk management. To mitigate future volatility, consider diversifying further into less correlated asset classes or sectors, which may cushion the impact of market fluctuations on overall performance.

Projection Info

Forward projections using Monte Carlo simulations show a wide range of potential outcomes. With a 50th percentile projection of 395.6% and a 67th percentile of 589.0%, the portfolio has a high potential for growth. However, these projections are based on historical data and assume similar market conditions, which may not hold true. To account for uncertainties, regularly review and adjust your portfolio to align with changing market conditions and personal financial goals, ensuring it remains on track to meet your investment objectives.

Asset classes Info

  • Stocks
    89%
  • Bonds
    10%
  • Cash
    1%
  • Other
    0%
  • No data
    0%

The portfolio's allocation across asset classes is heavily weighted towards stocks, with minimal exposure to bonds and cash. This skew towards equities suggests a focus on growth, but it may also increase volatility. Compared to a balanced benchmark, this allocation is more aggressive. To achieve better risk-adjusted returns, consider increasing the bond allocation or introducing alternative assets. This could help stabilize the portfolio during market downturns and provide a more predictable income stream.

Sectors Info

  • Technology
    23%
  • Financials
    15%
  • Telecommunications
    9%
  • Industrials
    9%
  • Consumer Discretionary
    8%
  • Health Care
    8%
  • Consumer Staples
    6%
  • Energy
    3%
  • Basic Materials
    3%
  • Consumer Discretionary
    3%
  • Utilities
    2%
  • Real Estate
    2%

Sector allocation is concentrated in technology, financial services, and communication services, which together comprise 47% of the portfolio. This concentration may lead to higher volatility, especially during sector-specific downturns. Compared to common benchmarks, the portfolio is tech-heavy. To mitigate potential risks, consider diversifying into sectors like healthcare or consumer staples, which tend to be more stable and less sensitive to economic cycles, thereby enhancing overall portfolio resilience.

Regions Info

  • North America
    66%
  • Asia Emerging
    14%
  • Asia Developed
    5%
  • Africa/Middle East
    3%
  • Latin America
    2%
  • Europe Developed
    0%
  • Europe Emerging
    0%

Geographically, the portfolio is heavily weighted towards North America, with 66% exposure, followed by emerging markets in Asia. This allocation offers growth potential but may increase susceptibility to regional economic shifts. Compared to global benchmarks, the lack of exposure to Europe is notable. To enhance diversification, consider adding European equities, which could provide balance and reduce reliance on U.S. and Asian markets, potentially improving risk-adjusted returns over time.

Market capitalization Info

  • Mega-cap
    38%
  • Large-cap
    25%
  • Mid-cap
    16%
  • Small-cap
    8%
  • Micro-cap
    1%

The portfolio's market capitalization distribution is skewed towards mega and big caps, which make up 63% of the allocation. This focus on large-cap stocks offers stability and lower volatility compared to small or micro-cap stocks. However, it may limit growth opportunities. To capture potential gains from smaller, more dynamic companies, consider increasing exposure to mid and small-cap stocks, which could enhance growth prospects and provide a more balanced risk-return profile.

Redundant positions Info

  • iShares Core S&P 500 ETF
    SPDR® Portfolio S&P 500 ETF
    Schwab U.S. Large-Cap Growth ETF
    Invesco S&P 500® Quality ETF
    High correlation
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares
    VANGUARD EMERGING MARKETS STOCK INDEX FUND INVESTOR SHARES
    High correlation

The portfolio contains highly correlated groups, particularly among U.S. large-cap ETFs. This correlation suggests that these assets may move together, limiting diversification benefits during market downturns. To enhance diversification, consider replacing some of these assets with less correlated options, such as international equities or alternative investments. This could reduce the overall risk and improve the portfolio's ability to withstand market volatility, leading to more stable long-term returns.

Dividends Info

  • Vanguard Total Bond Market Index Fund ETF Shares 3.40%
  • iShares Core S&P 500 ETF 1.40%
  • Schwab U.S. Large-Cap Growth ETF 0.50%
  • Invesco S&P 500® Quality ETF 0.60%
  • SPDR® Portfolio S&P 500 ETF 1.40%
  • Invesco S&P 500® Momentum ETF 0.60%
  • Vanguard Small-Cap Index Fund ETF Shares 1.20%
  • VANGUARD EMERGING MARKETS STOCK INDEX FUND INVESTOR SHARES 0.60%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 3.30%
  • Weighted yield (per year) 1.26%

The portfolio's total dividend yield is 1.26%, with bonds contributing significantly to this yield. While dividends provide a steady income stream, the yield is relatively low compared to income-focused portfolios. For those seeking higher income, consider increasing exposure to high-dividend stocks or dividend-focused ETFs. This adjustment could enhance cash flow, providing more consistent returns, especially during periods of market volatility or economic uncertainty.

Ongoing product costs Info

  • Vanguard Total Bond Market Index Fund ETF Shares 0.03%
  • iShares Core S&P 500 ETF 0.03%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Invesco S&P 500® Quality ETF 0.15%
  • SPDR® Portfolio S&P 500 ETF 0.02%
  • Invesco S&P 500® Momentum ETF 0.13%
  • Vanguard Small-Cap Index Fund ETF Shares 0.05%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.05%

The portfolio's total expense ratio (TER) is impressively low at 0.05%, indicating cost efficiency. Low costs are crucial for long-term growth, as they minimize the drag on returns. Compared to industry averages, this TER is favorable, supporting better compounding over time. To maintain cost efficiency, regularly review and compare expense ratios of current holdings with similar options. This vigilance ensures that the portfolio remains cost-effective, maximizing net returns and enhancing overall performance.

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.

The portfolio could be optimized using the Efficient Frontier, focusing on the best risk-return ratio. This involves adjusting the current asset allocation to achieve maximum returns for a given risk level. However, it's important to note that this optimization is based solely on existing assets, not introducing new ones. Regularly reassess the portfolio's efficiency, considering changes in market conditions and personal risk tolerance, to ensure it remains aligned with investment objectives and provides optimal performance.

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