Balanced portfolio with strong US focus and moderate dividend yield

Report created on Dec 25, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

This portfolio is composed of four ETFs, with a significant focus on US equities. The Vanguard Total Stock Market Index Fund ETF Shares makes up 40% of the portfolio, providing broad exposure to the US stock market. The Schwab U.S. Dividend Equity ETF accounts for 30%, focusing on dividend-paying US stocks. Invesco QQQ Trust, at 20%, offers exposure to large-cap technology companies. Lastly, the Vanguard FTSE Emerging Markets Index Fund ETF Shares, comprising 10%, adds some international diversification. This composition aligns with a balanced investment strategy, yet it could benefit from further diversification beyond US equities.

Growth Info

Historically, this portfolio has delivered a strong Compound Annual Growth Rate (CAGR) of 13.45%, reflecting robust past performance. However, it's important to note the maximum drawdown of -32.21%, indicating significant potential losses during downturns. Such performance metrics are vital as they illustrate both the growth potential and risks involved. While past performance is not indicative of future results, these figures suggest a solid track record. To mitigate drawdowns, consider diversifying further to balance growth with stability.

Projection Info

Using Monte Carlo simulations, this portfolio's potential future outcomes have been projected. With 1,000 simulations, the median outcome shows a potential growth of 368.03%, while the more optimistic 67th percentile suggests 547.91% growth. The 5th percentile, however, indicates a lower potential of 39.52%. These projections are based on historical data and should be viewed as hypothetical scenarios rather than guarantees. To enhance future performance, consider incorporating assets that may perform well under varying market conditions.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio is heavily weighted towards stocks, with 99.28% in equities and minimal allocations in cash and other assets. This concentration in a single asset class can enhance growth potential but also elevates risk, especially during market downturns. Diversification across multiple asset classes, such as bonds or real estate, could provide a buffer against volatility. Balancing the portfolio with different asset classes can help achieve a more stable risk-return profile over time.

Sectors Info

  • Technology
    28%
  • Financials
    14%
  • Consumer Discretionary
    12%
  • Health Care
    10%
  • Telecommunications
    9%
  • Industrials
    8%
  • Consumer Staples
    8%
  • Energy
    6%
  • Basic Materials
    2%
  • Utilities
    2%
  • Real Estate
    1%

The portfolio is notably concentrated in the technology sector, accounting for 27.73% of the allocation, followed by financial services and consumer cyclicals. Such sector concentration can lead to higher volatility, particularly if the tech sector experiences downturns due to factors like interest rate changes. A more balanced sector allocation could mitigate this risk. Consider increasing exposure to underrepresented sectors, which might offer stability and growth opportunities in different economic cycles.

Regions Info

  • North America
    89%
  • Asia Emerging
    6%
  • Asia Developed
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%
  • Europe Developed
    1%

Geographic allocation is heavily skewed towards North America, representing 89.19% of the portfolio. This focus on the US market limits exposure to international growth opportunities and increases vulnerability to domestic economic shifts. Expanding geographic diversification could enhance returns and mitigate risks associated with regional economic downturns. Consider increasing allocations to developed and emerging markets outside North America for a more globally diversified portfolio.

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 Efficient Frontier analysis suggests that the portfolio could be optimized for a better risk-return ratio. By adjusting the weightings of the current assets, it may be possible to achieve a more efficient allocation. This optimization focuses on maximizing returns for a given level of risk, without necessarily increasing diversification. Consider rebalancing the portfolio to align with the Efficient Frontier, ensuring that each asset contributes optimally to the overall risk-return profile.

Dividends Info

  • Invesco QQQ Trust 0.40%
  • Schwab U.S. Dividend Equity ETF 3.60%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.90%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 3.10%
  • Weighted yield (per year) 1.83%

With a total dividend yield of 1.83%, this portfolio provides a moderate income stream. The Schwab U.S. Dividend Equity ETF significantly contributes with a 3.6% yield, offering stability through dividends. Dividends can be an essential component of total returns, especially during market downturns when capital gains might be limited. For investors seeking higher income, increasing exposure to dividend-focused assets could be beneficial, balancing growth with a steady income flow.

Ongoing product costs Info

  • Invesco QQQ Trust 0.20%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.08%

The portfolio's total expense ratio (TER) is impressively low at 0.08%, which supports better long-term performance by minimizing costs. Low fees are crucial as they can significantly impact net returns over time. Maintaining a focus on cost-efficient investments can enhance overall portfolio performance. Regularly review the expense ratios of the holdings to ensure continued cost-effectiveness and consider replacing high-fee assets with lower-cost alternatives if necessary.

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