A balanced US-focused portfolio with strong growth potential and moderate diversification

Report created on Jan 29, 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

This portfolio is primarily composed of ETFs and common stocks, with a significant allocation to large-cap US equities. The Vanguard S&P 500 ETF and Schwab U.S. Dividend Equity ETF make up a substantial portion, providing broad market exposure and dividend income. The portfolio's composition leans heavily towards equities, which aligns with a balanced risk profile. Compared to typical benchmarks, this portfolio is moderately diversified, emphasizing US markets. To further enhance diversification, consider incorporating more international equities or fixed-income assets, which can help mitigate US market-specific risks and provide a cushion during downturns.

Growth Info

Historically, the portfolio has delivered an impressive CAGR of 16.84%, indicating strong growth over time. This performance is above average compared to standard market benchmarks, suggesting effective asset selection and allocation. However, the maximum drawdown of -16.63% highlights potential volatility, which is typical for equity-heavy portfolios. While past performance is not a guarantee of future results, these figures suggest a well-performing portfolio. To maintain this trajectory, consider periodically reviewing asset allocations and rebalancing as needed to align with evolving market conditions and personal investment goals.

Projection Info

Using a Monte Carlo simulation, which projects future outcomes based on historical data, the portfolio shows promising potential. With a median projected return of 757.3% and positive returns in 989 out of 1,000 simulations, the outlook is optimistic. However, it's important to note that these projections are based on historical trends and cannot predict future market conditions with certainty. To enhance future performance, consider diversifying further across asset classes and geographies, which can help buffer against unforeseen market shifts and improve the portfolio's resilience over time.

Asset classes Info

  • Stocks
    99%
  • No data
    1%

The portfolio is heavily weighted towards equities, with 99% in stocks, which indicates a strong focus on growth. This allocation may benefit from the higher returns typically associated with equities but also exposes the portfolio to significant volatility. Compared to a typical balanced benchmark, this portfolio has limited exposure to fixed income or alternative assets. To enhance diversification and reduce risk, consider incorporating bonds or other asset classes, which can provide stability and income, especially during market downturns, offering a more balanced risk-return profile.

Sectors Info

  • Technology
    23%
  • Financials
    18%
  • Consumer Staples
    16%
  • Consumer Discretionary
    13%
  • Telecommunications
    9%
  • Health Care
    8%
  • Industrials
    6%
  • Energy
    4%
  • Basic Materials
    2%
  • Utilities
    1%
  • Real Estate
    1%

Sector allocation shows a significant concentration in technology (23%) and financial services (18%), which aligns with current market trends but may also increase volatility. This tech-heavy exposure can lead to higher returns during growth periods but may suffer during market corrections or interest rate hikes. Compared to benchmarks, the portfolio is well-diversified across sectors but could benefit from increased exposure to underrepresented areas like utilities or real estate. Balancing sector allocations can help mitigate sector-specific risks and provide more consistent returns across varying economic cycles.

Regions Info

  • North America
    95%
  • Europe Developed
    2%
  • Asia Emerging
    1%
  • Japan
    1%
  • Asia Developed
    1%

The portfolio's geographic allocation is heavily skewed towards North America, with 95% exposure, which limits international diversification. This concentration can lead to higher risk if the US market underperforms. Compared to global benchmarks, this portfolio has minimal exposure to Europe, Asia, and other regions. To enhance geographic diversification and reduce reliance on the US market, consider increasing allocations to international equities. This can provide exposure to different economic cycles and growth opportunities, particularly in emerging markets, which may offer higher returns over the long term.

Market capitalization Info

  • Mega-cap
    61%
  • Large-cap
    19%
  • Mid-cap
    9%
  • Small-cap
    6%
  • Micro-cap
    5%

The portfolio primarily consists of mega-cap stocks (61%), which are typically less volatile and provide stable returns. This focus aligns with a balanced risk profile, offering a mix of growth and stability. However, there's a notable underweight in small and micro-cap stocks, which can offer higher growth potential but also come with increased risk. To optimize diversification and capture potential high-growth opportunities, consider slightly increasing exposure to smaller-cap stocks. This can enhance the portfolio's growth prospects while maintaining a balanced approach to risk management.

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 appears to be well-positioned on the Efficient Frontier, indicating a strong risk-return trade-off based on current assets. This suggests that the portfolio is optimized for its level of risk, providing the best possible returns without unnecessary exposure. However, as market conditions and personal goals change, it's important to regularly reassess allocations. Small adjustments, such as rebalancing or incorporating new asset classes, can help maintain optimal efficiency. This proactive approach ensures the portfolio continues to meet desired risk-return objectives over time.

Dividends Info

  • Apple Inc 0.40%
  • Avantis® U.S. Small Cap Value ETF 1.60%
  • Blackstone Group Inc 1.90%
  • Costco Wholesale Corp 0.50%
  • Alphabet Inc Class A 0.30%
  • JPMorgan Nasdaq Equity Premium Income ETF 9.50%
  • McDonald’s Corporation 2.30%
  • Microsoft Corporation 0.70%
  • Schwab U.S. Dividend Equity ETF 3.50%
  • UnitedHealth Group Incorporated 1.50%
  • Visa Inc. Class A 0.60%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.30%
  • Walmart Inc 0.90%
  • Weighted yield (per year) 1.74%

The portfolio's dividend yield stands at 1.74%, offering a modest income stream. With ETFs like the Schwab U.S. Dividend Equity ETF contributing significantly, dividends play a supportive role in total returns. For investors seeking higher income, consider increasing exposure to high-dividend stocks or ETFs. However, it's crucial to balance this with growth objectives, as high-dividend stocks may not always offer the same capital appreciation potential. Maintaining a blend of dividend and growth-oriented assets can help achieve a balanced approach to income and capital growth.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • JPMorgan Nasdaq Equity Premium Income ETF 0.35%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.06%

Portfolio costs are impressively low, with a total expense ratio (TER) of 0.06%, which supports better long-term performance by minimizing drag on returns. This cost efficiency is a positive aspect, aligning with best practices for portfolio management. However, it's important to regularly review fund expenses, as even small changes can impact overall returns over time. Keeping costs low while ensuring quality investments is key to maximizing net returns. Consider periodically comparing current holdings with alternative low-cost options to ensure ongoing cost-effectiveness.

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