A moderately diversified balanced portfolio with a strong tilt towards large-cap U.S. equities

Report created on Mar 21, 2025

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 predominantly of U.S. equities, with a significant 40% allocation to the SPDR® Portfolio S&P 1500 Composite Stock Market ETF. It also includes 20% in Schwab U.S. Large-Cap Growth ETF and smaller allocations in bond and dividend-focused ETFs. This structure leans heavily towards equities, providing growth potential but with moderate diversification. A balanced portfolio often aims for growth while managing risk, and this mix reflects that strategy. To enhance diversification, consider adding more varied asset classes or regions, as the current allocation is concentrated in the U.S. market.

Growth Info

Historically, the portfolio has delivered a robust Compound Annual Growth Rate (CAGR) of 13.62%, indicating strong past performance. This is impressive compared to typical market benchmarks, reflecting the growth potential of the underlying assets. However, the maximum drawdown of -23.44% highlights the risk of significant losses during market downturns. While past performance is encouraging, it's crucial to remember that it doesn't guarantee future results. To mitigate potential downturns, consider diversifying further or incorporating more defensive assets.

Projection Info

Using Monte Carlo simulations, which project future outcomes based on historical data, the portfolio shows promising potential. With 1,000 simulations, the median (50th percentile) outcome suggests a potential return of 398.3%. However, the 5th percentile outcome at 91.6% warns of possible downside risks. While these projections offer a glimpse into potential futures, they rely on past data and assumptions. To better prepare for future uncertainties, periodically review asset allocations and adjust based on personal risk tolerance and market conditions.

Asset classes Info

  • Stocks
    84%
  • Bonds
    15%
  • No data
    1%

The portfolio's asset allocation is heavily weighted towards stocks at 84%, with bonds making up 15%. This allocation reflects a growth-oriented strategy, typical for investors seeking higher returns. However, the limited bond exposure may not provide sufficient cushion during market volatility. Compared to balanced benchmarks, this portfolio leans more towards equities. To align with a more traditional balanced approach, consider increasing bond exposure, which can help stabilize returns and reduce overall portfolio risk.

Sectors Info

  • Technology
    25%
  • Financials
    12%
  • Health Care
    10%
  • Consumer Discretionary
    9%
  • Telecommunications
    7%
  • Industrials
    7%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    2%
  • Utilities
    2%
  • Real Estate
    1%

Sector-wise, the portfolio is notably concentrated in technology (25%), followed by financial services (12%) and healthcare (10%). This sectoral allocation aligns with common growth-focused strategies but may expose the portfolio to sector-specific risks, especially if tech faces downturns. Compared to broader market benchmarks, this portfolio is tech-heavy, which can lead to higher volatility. To mitigate risks, consider diversifying across more sectors or reducing the weight in technology, balancing it with more defensive sectors like consumer defensive or utilities.

Regions Info

  • North America
    80%
  • Europe Developed
    2%
  • Asia Emerging
    1%
  • Japan
    1%
  • Asia Developed
    1%

Geographically, the portfolio is heavily concentrated in North America at 80%, with minimal exposure to other regions. This focus can be beneficial when the U.S. market performs well but may limit diversification benefits. Compared to global benchmarks, which typically have more international exposure, this portfolio could be at risk if the U.S. market underperforms. To enhance geographic diversification, consider increasing allocations to international markets, which can offer exposure to different economic cycles and growth opportunities.

Market capitalization Info

  • Mega-cap
    33%
  • Large-cap
    32%
  • Mid-cap
    16%
  • Small-cap
    3%
  • Micro-cap
    1%

The portfolio's market capitalization is dominated by mega and big-cap stocks, comprising 65% of the allocation. This focus on large, established companies provides stability and growth potential but may limit exposure to smaller, potentially higher-growth firms. Compared to benchmarks that include more small and mid-cap stocks, this portfolio could benefit from increased diversification. Consider adding more mid and small-cap stocks to capture potential growth opportunities and enhance diversification across company sizes.

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 be optimized using the Efficient Frontier, which seeks the best risk-return ratio for a given set of assets. Currently, the portfolio's allocation may not fully capitalize on this optimization technique. By adjusting the weights of existing assets, it might be possible to achieve a more efficient balance between risk and return. However, optimization solely focuses on existing assets and does not guarantee diversification. Regularly reassess your allocations to ensure they align with your risk tolerance and financial goals.

Dividends Info

  • Vanguard Total Bond Market Index Fund ETF Shares 3.60%
  • JPMorgan Equity Premium Income ETF 7.50%
  • Schwab U.S. Dividend Equity ETF 2.80%
  • Schwab U.S. Large-Cap Growth ETF 0.30%
  • SPDR® Portfolio S&P 1500 Composite Stock Market ETF 1.00%
  • Vanguard Total International Stock Index Fund ETF Shares 2.80%
  • Weighted yield (per year) 1.94%

With a total dividend yield of 1.94%, this portfolio provides a modest income stream. Notably, the JPMorgan Equity Premium Income ETF offers a high yield of 7.50%, contributing significantly to the overall yield. For income-focused investors, dividends can be a reliable source of returns, especially during market downturns. If income is a priority, consider increasing allocations to high-dividend ETFs or stocks. However, ensure that the pursuit of yield does not compromise the portfolio's growth potential and risk profile.

Ongoing product costs Info

  • Vanguard Total Bond Market Index Fund ETF Shares 0.03%
  • JPMorgan Equity Premium Income ETF 0.35%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • SPDR® Portfolio S&P 1500 Composite Stock Market ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.05%
  • Weighted costs total (per year) 0.05%

The portfolio's total expense ratio (TER) is impressively low at 0.05%, which is beneficial for long-term performance. Lower costs mean more of your returns stay in your pocket, compounding over time. This cost efficiency is a strong point, aligning with best practices for minimizing investment expenses. To maintain cost-effectiveness, continue monitoring expense ratios and consider low-cost alternatives when making changes. Keeping costs low can significantly enhance net returns over the long term.

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