A balanced portfolio with a strong focus on US equities and moderate growth potential

Report created on Dec 29, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

The portfolio is heavily concentrated in ETFs, with Invesco NASDAQ 100 ETF and Vanguard Total Stock Market Index Fund ETF Shares making up a significant portion. This composition suggests a focus on broad market exposure, particularly in the technology sector. While ETFs offer diversification within their holdings, the overall portfolio lacks diversity due to its heavy reliance on a few key funds. To enhance diversification, consider incorporating other asset classes like bonds or international equities, which can reduce risk and improve stability.

Growth Info

The portfolio's historical performance shows a strong CAGR of 15.43%, reflecting robust growth over time. However, it also experienced a significant maximum drawdown of -23.74%, indicating vulnerability during market downturns. Comparing this to a balanced benchmark, the portfolio has outperformed in terms of growth but at a higher risk. While past performance is not indicative of future results, understanding these trends can help in assessing risk tolerance and setting realistic expectations for future returns.

Projection Info

The Monte Carlo simulation provides a range of potential future outcomes based on historical data, with a median projection of 344.45% growth. The simulation highlights the uncertainty and variability of potential returns, with some scenarios showing significant losses. While this tool uses past data to project future outcomes, it's essential to remember that it cannot predict specific future events or market changes. Consider using these insights to evaluate whether the current risk level aligns with your long-term financial goals.

Asset classes Info

  • Stocks
    100%

This portfolio is almost entirely allocated to stocks, with a negligible cash component. Such a high stock allocation can lead to higher returns but also increases exposure to market volatility. Comparing this to a typical balanced portfolio, which might include bonds or other fixed-income assets, there is room to diversify. Introducing more asset classes can help mitigate risk and provide a buffer during market downturns, contributing to a more stable long-term performance.

Sectors Info

  • Technology
    28%
  • Consumer Staples
    20%
  • Consumer Discretionary
    11%
  • Financials
    9%
  • Telecommunications
    9%
  • Health Care
    9%
  • Industrials
    7%
  • Energy
    4%
  • Basic Materials
    1%
  • Utilities
    1%
  • Real Estate
    1%

The portfolio is notably concentrated in the technology sector, which comprises over 28% of the holdings. While tech stocks have driven substantial growth in recent years, they can also be more volatile, especially during economic shifts or interest rate changes. Compared to a benchmark, this sector allocation suggests a tilt towards growth. To balance this, consider diversifying into sectors that may perform well in different economic cycles, such as healthcare or utilities, to reduce reliance on tech performance.

Regions Info

  • North America
    99%
  • Europe Developed
    1%

Geographically, the portfolio is heavily weighted towards North American assets, with over 98% exposure. This concentration limits international diversification, which can help mitigate risks associated with regional economic downturns. Compared to global benchmarks, this portfolio has minimal exposure to emerging markets and developed economies outside North America. To enhance geographic diversification, consider adding international equities or funds that provide exposure to different regions, potentially improving risk-adjusted returns.

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.

Portfolio optimization suggests that a more efficient allocation could achieve a higher expected return of 16.27% with the same risk level. The Efficient Frontier concept helps identify the best possible risk-return ratio by adjusting asset weights. While this optimization is based solely on the current assets, it highlights potential improvements. Consider rebalancing the portfolio to align more closely with the Efficient Frontier, ensuring that you are maximizing returns for the level of risk you are comfortable with.

Dividends Info

  • Invesco NASDAQ 100 ETF 0.60%
  • Schwab U.S. Dividend Equity ETF 3.60%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Walmart Inc 0.70%
  • Weighted yield (per year) 1.54%

The portfolio's total dividend yield stands at 1.54%, with the Schwab U.S. Dividend Equity ETF contributing significantly. Dividends can provide a steady income stream and help cushion against market volatility. For investors seeking income, focusing on dividend-paying stocks or funds can enhance returns. However, if growth is the primary goal, maintaining a balance between dividend and non-dividend-paying assets is essential to optimize overall portfolio performance and meet financial objectives.

Ongoing product costs Info

  • Invesco NASDAQ 100 ETF 0.15%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.07%

The portfolio's total expense ratio (TER) is impressively low at 0.07%, thanks to the use of cost-effective ETFs. Low fees are crucial as they can significantly impact long-term returns, allowing more of your investment to grow over time. Compared to industry standards, this portfolio's costs are quite competitive, supporting better net performance. Continuously monitoring and minimizing costs by opting for low-cost funds or negotiating fees can further enhance the portfolio's efficiency and maximize returns.

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