A balanced portfolio with strong US focus and low diversification across sectors

Report created on Jan 7, 2025

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.

Positions

The portfolio is heavily weighted towards equities, with 99.64% of the assets in stocks, primarily through three ETFs. This composition aligns with a typical equity-focused investment strategy but lacks diversification across asset classes. While a high equity allocation can offer significant growth potential, it also introduces volatility. For a balanced portfolio, consider incorporating bonds or alternative investments to mitigate risk and enhance diversification.

Growth Info

Historically, the portfolio has performed well, boasting a Compound Annual Growth Rate (CAGR) of 13.95%. This suggests robust growth over time, outperforming many traditional benchmarks. However, the maximum drawdown of -33.64% indicates significant risk during market downturns. Understanding that past performance doesn't guarantee future results, it's essential to maintain a balanced risk approach to sustain long-term growth.

Projection Info

Using Monte Carlo simulations, which project potential outcomes based on historical data, the portfolio shows a 50th percentile return of 576.56% and a 16.32% annualized return. While these projections are promising, it's crucial to remember that they rely on historical trends and assumptions. Future market conditions may differ, highlighting the need for ongoing portfolio assessment and adjustments.

Asset classes Info

  • Stocks
    100%

With nearly the entire portfolio allocated to stocks, the lack of diversification across asset classes is evident. This concentration can increase vulnerability to market swings. Diversification across different asset classes, such as bonds or real estate, can provide stability and reduce portfolio risk. Consider reallocating a portion of the portfolio to include fixed-income securities to achieve a more balanced risk profile.

Sectors Info

  • Technology
    29%
  • Financials
    13%
  • Health Care
    11%
  • Consumer Discretionary
    11%
  • Industrials
    9%
  • Telecommunications
    9%
  • Consumer Staples
    7%
  • Energy
    5%
  • Real Estate
    2%
  • Utilities
    2%
  • Basic Materials
    2%

The portfolio is tech-heavy, with 28.78% in technology, and has a balanced exposure to other sectors like financial services and healthcare. While tech stocks offer high growth potential, they can be volatile, especially during interest rate changes. Diversifying further into underrepresented sectors like utilities or basic materials can reduce sector-specific risks and enhance overall stability.

Regions Info

  • North America
    99%
  • Europe Developed
    1%

Geographically, the portfolio is overwhelmingly concentrated in North America, with 99.31% exposure. This limits global diversification and increases vulnerability to regional economic shifts. To mitigate this risk, consider increasing exposure to international markets. Diversifying geographically can help capture growth opportunities in emerging economies and reduce reliance on the US market.

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 potentially benefit from optimization using the Efficient Frontier, which aims to achieve the best possible risk-return ratio. By adjusting the allocation among current assets, the portfolio can be fine-tuned for efficiency. This doesn't necessarily mean adding new assets but reallocating existing ones to maximize returns for a given level of risk.

Dividends Info

  • Invesco QQQ Trust 0.50%
  • Schwab U.S. Dividend Equity ETF 3.60%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Weighted yield (per year) 1.61%

The portfolio's overall dividend yield is 1.61%, with the Schwab U.S. Dividend Equity ETF contributing a significant 3.6%. Dividends can provide a steady income stream and enhance total returns, especially in volatile markets. While the current yield is modest, reinvesting dividends can compound returns over time. Consider maintaining or increasing dividend-paying assets for income stability.

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%
  • Weighted costs total (per year) 0.05%

The portfolio's total expense ratio (TER) is impressively low at 0.05%, reflecting cost-effective management. Keeping costs low is crucial for maximizing net returns over the long term. Regularly reviewing and minimizing expenses helps enhance portfolio performance. Continue monitoring for any opportunities to replace higher-cost assets with more cost-effective alternatives.

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