A balanced portfolio with a tech focus and strong historical returns

Report created on Jan 9, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio is composed of three ETFs, with a significant 70% allocation to the Vanguard Total Stock Market Index Fund ETF. The Invesco NASDAQ 100 ETF accounts for 20%, and the Vanguard Total International Stock Index Fund ETF makes up 10%. This composition reflects a strong tilt towards U.S. equities, particularly the tech sector, while maintaining some international exposure. Compared to a typical balanced portfolio, this allocation is more equity-heavy, which can offer higher growth potential but also increased volatility. To align with a balanced risk profile, consider diversifying further across asset classes like bonds or real estate.

Growth Info

Historically, the portfolio has performed well, with a Compound Annual Growth Rate (CAGR) of 14.08%. This impressive growth rate outpaces many benchmarks, indicating a strong historical performance. However, the maximum drawdown of -27.45% highlights potential vulnerability during market downturns. It's crucial to remember that past performance doesn't guarantee future results, but understanding these trends can help set realistic expectations. To mitigate future drawdowns, consider strategies that balance growth with risk management, such as adding more defensive assets.

Projection Info

The Monte Carlo simulation, which uses historical data to project future outcomes, shows promising potential for this portfolio. With 1,000 simulations, the median outcome suggests a 387.59% return, while the 67th percentile projects a 546.22% return. However, the 5th percentile indicates a 49.77% return, underscoring the inherent uncertainty in projections. While these simulations offer a glimpse into possible future scenarios, they rely on historical patterns that may not repeat. It's wise to use these projections as a guide, not a guarantee, and to regularly reassess your strategy.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted towards stocks, with 99.64% in equities and minimal allocation to cash and other assets. This concentration in a single asset class can drive growth but also raises risk during market volatility. Compared to a typical balanced portfolio, which might include a mix of stocks, bonds, and other assets, this allocation is more aggressive. For improved diversification and risk management, consider incorporating other asset classes such as fixed income or commodities, which can help cushion against stock market fluctuations.

Sectors Info

  • Technology
    33%
  • Financials
    12%
  • Consumer Discretionary
    11%
  • Health Care
    10%
  • Telecommunications
    10%
  • Industrials
    8%
  • Consumer Staples
    6%
  • Energy
    3%
  • Basic Materials
    2%
  • Utilities
    2%
  • Real Estate
    2%

Sector-wise, the portfolio is notably concentrated in technology, which makes up 33% of the allocation. Other significant sectors include financial services, consumer cyclicals, and healthcare. While tech investments have historically driven strong returns, they can also introduce higher volatility, especially during economic shifts or regulatory changes. The sector allocation aligns closely with major indices, providing a diversified exposure across industries. However, to reduce sector-specific risks, consider balancing the portfolio by increasing exposure to less represented sectors like utilities or real estate.

Regions Info

  • North America
    90%
  • Europe Developed
    4%
  • Asia Emerging
    2%
  • Japan
    2%
  • Asia Developed
    1%
  • Australasia
    1%

Geographically, the portfolio is predominantly focused on North America, with 90% exposure, while other regions like Europe Developed and Asia Emerging have minimal representation. This concentration provides stability from the U.S. market but limits diversification benefits from global exposure. Compared to global benchmarks, this geographic allocation is less diversified. To enhance global diversification and potentially capture growth opportunities in other regions, consider increasing allocations to underrepresented areas such as emerging markets or Europe.

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 currently sits near the Efficient Frontier, which represents the optimal risk-return balance for a given set of assets. While it is well-positioned, there may still be opportunities to fine-tune the allocation for even better efficiency. This involves adjusting the weights of existing assets to achieve the best possible risk-return ratio. However, remember that optimization is based on historical data and current assets, so it's important to regularly review and adjust the portfolio as market conditions and personal goals evolve.

Dividends Info

  • Invesco NASDAQ 100 ETF 0.60%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Vanguard Total International Stock Index Fund ETF Shares 3.40%
  • Weighted yield (per year) 1.37%

The portfolio has a total dividend yield of 1.37%, with the Vanguard Total International Stock Index Fund ETF contributing the highest yield at 3.4%. Dividend income can provide a steady cash flow and enhance total returns, especially in volatile markets. While the overall yield is moderate, it aligns with the portfolio's growth-oriented approach. For investors seeking higher income, exploring additional dividend-focused investments might be beneficial. However, keep in mind that higher yields often come with increased risk.

Ongoing product costs Info

  • Invesco NASDAQ 100 ETF 0.15%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.06%

The portfolio's total expense ratio (TER) is impressively low at 0.06%, thanks to the cost-efficient nature of the chosen ETFs. Lower costs can significantly enhance long-term returns by minimizing the drag on performance. Compared to industry averages, this TER is highly competitive and supports the portfolio's growth objectives. Maintaining low costs is a key strength, but it's essential to periodically review them to ensure they remain competitive. Consider if any changes in the portfolio composition could lead to cost savings without sacrificing performance.

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