A balanced and broadly diversified portfolio with a strong focus on technology and dividends
Report created on May 8, 2025Risk profile
4/7
Diversification profile
4/5
Positions
-
VT Vanguard Total World Stock Index Fund ETF Shares
VT - US9220427424 50.00% -
QQ Invesco NASDAQ 100 ETF
QQQM - US46138G6492 25.00% -
SC Schwab U.S. Dividend Equity ETF
SCHD - US8085247976 15.00% -
TO SPDR® DoubleLine Total Return Tactical ETF
TOTL - US78467V8485 10.00%
The portfolio is structured around four ETFs, emphasizing global equities and income generation. With 50% in a global stock index, 25% in a tech-focused ETF, 15% in a dividend equity ETF, and 10% in a bond ETF, the allocation demonstrates a balanced approach between growth and income. This diversification is both sectoral and geographical, though with a significant lean towards North American markets. The blend of global and sector-specific ETFs, alongside a bond component for income and stability, is a strategic choice for risk-adjusted returns.
Growth
Historically, the portfolio has achieved a Compound Annual Growth Rate (CAGR) of 10.60%, with a maximum drawdown of -25.42%. These figures suggest a resilient performance through market cycles, with the drawdown indicating the portfolio's risk level during downturns. The days contributing to 90% of returns highlight the importance of staying invested through volatility. Comparing these metrics to benchmarks can provide insight into the portfolio's relative risk and return profile, underscoring its balanced nature.
Projection
Monte Carlo simulations project a wide range of outcomes, with a median increase of 185% in portfolio value, emphasizing the potential for significant growth. However, the 5th percentile at a modest 3.3% gain reminds us of the inherent uncertainties in market investments. These simulations, while useful for understanding possible futures, are based on historical data and cannot predict actual outcomes. They underscore the importance of maintaining a diversified and balanced portfolio to navigate market volatility.
Asset classes
- Stocks 89%
- Bonds 10%
- Cash 1%
The portfolio's asset class distribution, with 89% in stocks and 10% in bonds, aligns with its balanced profile, aiming for growth while mitigating risk through fixed income. This allocation supports a strategy focused on long-term capital appreciation and income generation, appropriate for a balanced risk tolerance. Adjusting this mix can further fine-tune the portfolio's risk and return characteristics, potentially enhancing its alignment with specific investment goals and risk tolerance.
Sectors
- Technology 26%
- Financials 10%
- Consumer Discretionary 10%
- Health Care 9%
- Telecommunications 9%
- Industrials 8%
- Consumer Staples 8%
- Energy 5%
- Basic Materials 3%
- Utilities 2%
- Real Estate 1%
Sector allocation reveals a significant emphasis on technology, followed by financial services and consumer cyclicals. This concentration in tech may expose the portfolio to higher volatility, given the sector's rapid growth and frequent price fluctuations. Diversifying across additional sectors could reduce risk and capitalize on opportunities in other areas of the economy. It's crucial to monitor sector performance and adjust allocations to manage risk and pursue growth.
Regions
- North America 72%
- Europe Developed 8%
- Asia Emerging 3%
- Japan 3%
- Asia Developed 2%
- Australasia 1%
- Latin America 1%
- Africa/Middle East 1%
Geographically, the portfolio is heavily weighted towards North America, with limited exposure to emerging markets and other developed regions. This focus may limit global diversification benefits and exposure to growth opportunities in other parts of the world. Considering increasing allocations to underrepresented regions could enhance diversification and potentially improve returns, especially given the growth prospects in emerging markets.
Market capitalization
- Mega-cap 36%
- Large-cap 32%
- Mid-cap 17%
- Small-cap 4%
- Micro-cap 1%
The market capitalization breakdown, favoring mega and big cap stocks, suggests a preference for established, less volatile companies. While this can offer stability, incorporating more medium, small, or micro-cap stocks could enhance growth potential. These smaller companies often present higher growth opportunities, albeit with increased risk, which could be mitigated through careful selection and allocation.
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.
Regarding risk vs. return optimization, the portfolio appears well-positioned on the Efficient Frontier, indicating an effective balance between risk and potential returns. This balance is essential for achieving long-term investment goals without taking on unnecessary risk. Regularly reviewing this positioning and adjusting the asset allocation as market conditions and investment goals evolve can help maintain this optimal balance.
Dividends
- Invesco NASDAQ 100 ETF 0.60%
- Schwab U.S. Dividend Equity ETF 4.10%
- SPDR® DoubleLine Total Return Tactical ETF 5.30%
- Vanguard Total World Stock Index Fund ETF Shares 1.90%
- Weighted yield (per year) 2.24%
The portfolio's dividend yield stands at 2.24%, contributed by the equity ETFs, with the Schwab U.S. Dividend Equity ETF and SPDR® DoubleLine Total Return Tactical ETF offering higher yields. This income can provide a steady cash flow and help cushion volatility, underscoring the portfolio's balanced approach. Reinvesting dividends or adjusting allocations to higher-yielding assets could further enhance income and growth potential.
Ongoing product costs
- Invesco NASDAQ 100 ETF 0.15%
- Schwab U.S. Dividend Equity ETF 0.06%
- SPDR® DoubleLine Total Return Tactical ETF 0.55%
- Vanguard Total World Stock Index Fund ETF Shares 0.07%
- Weighted costs total (per year) 0.14%
With a total expense ratio (TER) of 0.14%, the portfolio is cost-efficient, which is crucial for maximizing long-term returns. Lower costs allow more of the investment's return to compound over time, a fundamental principle for wealth building. Periodic review of investment costs and considering even lower-cost alternatives, if available, can help retain more returns.
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