A balanced portfolio with strong US focus and moderate risk exposure

Report created on Mar 31, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio is anchored by a significant allocation to the SPDR S&P 500 ETF Trust, which makes up 26.95% of the total. This ETF provides broad exposure to the US stock market. The rest of the portfolio is diversified across various mutual funds, primarily focused on growth and equity strategies. Compared to a benchmark, this composition leans heavily towards equities. This structure is relevant as it suggests a growth-oriented strategy, but may lack diversification in other asset classes. Consider increasing exposure to bonds or alternative investments to balance risk and potential returns.

Growth Info

Historically, the portfolio has achieved a compound annual growth rate (CAGR) of 7.91%, with a maximum drawdown of -30.88%. This suggests that while the portfolio has delivered solid returns, it has also experienced significant volatility. The benchmark comparison highlights the portfolio's potential for growth, but also its susceptibility to market downturns. Understanding past performance helps set realistic expectations for future returns. To mitigate drawdowns, consider incorporating more defensive assets or strategies that can offer stability during market downturns.

Projection Info

The Monte Carlo simulation, with 1,000 iterations, provides a forward-looking view of potential portfolio outcomes. It projects a 5th percentile return of -22.6% and a 50th percentile return of 89.8%. While past performance data informs these projections, it's crucial to note that they are based on historical data and assumptions. The simulation suggests a reasonable probability of positive returns, but also highlights the potential for losses. To improve future outcomes, consider rebalancing the portfolio to optimize risk and return, possibly by adjusting asset allocations.

Asset classes Info

  • Stocks
    92%
  • Bonds
    8%
  • Cash
    1%

The portfolio's asset allocation is heavily weighted towards stocks, comprising 92% of the total, with only 8% in bonds. This allocation suggests a focus on growth, but may expose the portfolio to higher volatility. In comparison to benchmarks, this allocation is aggressive, and while it may offer higher returns, it also carries increased risk. Diversifying into additional asset classes, such as bonds or real estate, could enhance stability and reduce risk. A more balanced allocation may better align with a moderate risk tolerance.

Sectors Info

  • Technology
    24%
  • Financials
    18%
  • Health Care
    11%
  • Industrials
    11%
  • Telecommunications
    8%
  • Consumer Discretionary
    6%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    3%
  • Utilities
    3%
  • Real Estate
    3%
  • Consumer Discretionary
    3%

The portfolio's sector allocation is led by technology at 24%, followed by financial services at 18%, and healthcare at 11%. This concentration in technology may lead to higher volatility, especially during economic shifts or interest rate changes. While these sectors have performed well historically, relying too heavily on them can increase risk. A more balanced sector allocation can help mitigate sector-specific risks. Consider diversifying into underrepresented sectors to enhance the portfolio's resilience against market fluctuations.

Regions Info

  • North America
    85%
  • Europe Developed
    11%
  • Japan
    1%
  • Asia Developed
    1%
  • No data
    1%

Geographically, the portfolio is predominantly exposed to North America, with 85% of assets allocated there. This strong focus on the US market limits international diversification. While the US market has been a strong performer, over-reliance on a single region can increase vulnerability to local economic downturns. Expanding geographic exposure, particularly in emerging markets, could enhance diversification and provide access to growth opportunities outside of North America. This could help balance regional risks and improve long-term returns.

Market capitalization Info

  • Mega-cap
    38%
  • Large-cap
    34%
  • Mid-cap
    17%
  • Small-cap
    2%

The portfolio is primarily invested in large-cap stocks, with 38% in mega-cap and 34% in big-cap companies. This focus on large-cap stocks provides stability and lower volatility, as these companies are generally well-established. However, it may limit exposure to the growth potential of smaller companies. Increasing allocation to small- and mid-cap stocks could enhance growth prospects. Balancing market capitalization exposure can help achieve a more diversified portfolio, capturing opportunities across different company sizes and growth stages.

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's risk vs. return profile can be optimized using the Efficient Frontier, which identifies the best possible risk-return ratio for a given set of assets. This optimization focuses on reallocating existing assets rather than adding new ones. While the current allocation is moderately diversified, adjustments could enhance efficiency. By fine-tuning the balance between risk and return, the portfolio can achieve better performance without compromising its growth potential. This approach helps ensure that the portfolio is aligned with the investor's risk tolerance and goals.

Dividends Info

  • MFS DIVERSIFIED INCOME FUND A 3.40%
  • MFS VALUE FUND A 1.20%
  • MFS CORPORATE BOND FUND A 4.10%
  • MFS GLOBAL TOTAL RETURN FUND A 0.70%
  • MFS INTERNATIONAL VALUE FUND A 1.80%
  • MASSACHUSETTS INVESTORS TRUST A 0.20%
  • MFS TOTAL RETURN FUND A 1.40%
  • SPDR S&P 500 ETF Trust 1.00%
  • Weighted yield (per year) 0.74%

The portfolio's dividend yield is relatively low at 0.74%, reflecting its growth-oriented strategy. While dividends can provide a steady income stream, they are not the primary focus here. For income-seeking investors, this may be a limitation. However, the growth potential of the portfolio may compensate for the lower yield. If income generation is a priority, consider increasing exposure to dividend-paying stocks or funds. Balancing growth and income can help achieve a more comprehensive investment strategy.

Ongoing product costs Info

  • SPDR S&P 500 ETF Trust 0.10%
  • Weighted costs total (per year) 0.03%

The portfolio's costs are impressively low, with the SPDR S&P 500 ETF Trust having a Total Expense Ratio (TER) of just 0.03%. Low costs contribute positively to long-term performance by preserving returns. Keeping expenses in check is crucial, as high fees can erode gains over time. This cost-conscious approach aligns well with best practices in portfolio management. Continue monitoring and minimizing costs to ensure that they do not detract from the portfolio's overall performance.

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