A balanced and diversified portfolio with strong historical performance and moderate risk exposure

Report created on Dec 29, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio consists of 50% U.S. total stock market, 15% U.S. dividend stocks, 15% international stocks, 10% bonds, and 10% real estate. This composition reflects a balanced approach, offering exposure to both equity and fixed income, aligning with typical balanced portfolio benchmarks. The mix aims to capture growth from equities while mitigating risk through bonds and real estate. This allocation is well-structured for an investor seeking moderate growth with some risk mitigation, although it could benefit from further diversification in underrepresented asset classes.

Growth Info

Historically, the portfolio has delivered an impressive Compound Annual Growth Rate (CAGR) of 11.43%, outperforming many traditional balanced benchmarks. A hypothetical initial investment would have grown significantly over time, despite experiencing a maximum drawdown of -32.32%. This demonstrates the portfolio's resilience and potential for recovery after downturns. However, it's important to remember that past performance doesn't guarantee future results, so maintaining a diversified approach remains crucial.

Projection Info

The Monte Carlo simulation, which uses historical data to project future outcomes, indicates a 9.73% annualized return across 1,000 simulations. The projections show a wide range of potential outcomes, with a 5th percentile return of 14.57% and a 50th percentile of 210.45%. While these results offer a positive outlook, it's essential to understand that simulations rely on historical data and assumptions, which may not fully capture future market conditions. Regular portfolio reviews are recommended to adjust to changing circumstances.

Asset classes Info

  • Stocks
    79%
  • Real Estate
    10%
  • Bonds
    10%
  • Cash
    1%

The portfolio's allocation includes 79.4% in stocks, 10% in real estate, and 9.8% in bonds, with minimal cash and other holdings. This distribution reflects a strong equity focus, typical for balanced portfolios aiming for growth. The real estate component adds diversification and potential income, while bonds provide stability. However, the portfolio could benefit from increased bond exposure to enhance risk management, especially during market volatility. Adjusting the balance between asset classes can help optimize for both growth and risk.

Sectors Info

  • Technology
    19%
  • Financials
    13%
  • Real Estate
    12%
  • Health Care
    9%
  • Consumer Discretionary
    8%
  • Industrials
    8%
  • Telecommunications
    6%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    2%
  • Utilities
    2%

The portfolio is diversified across multiple sectors, with notable allocations in technology (18.95%), financial services (12.89%), and real estate (11.9%). This sectoral spread aligns with common benchmarks, indicating a well-diversified approach. However, the technology sector's high weighting may lead to increased volatility, especially if interest rates rise. Consider monitoring sector trends and adjusting allocations as necessary to maintain a balanced risk profile and capitalize on emerging opportunities.

Regions Info

  • North America
    76%
  • Europe Developed
    6%
  • Asia Emerging
    2%
  • Japan
    2%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

The geographic allocation is heavily weighted towards North America (75.87%), with limited exposure to other regions. While this aligns with many U.S.-focused portfolios, it may limit diversification benefits and increase vulnerability to regional economic shifts. Expanding exposure to underrepresented regions could enhance diversification and tap into growth opportunities abroad. Regularly reviewing geographic allocations ensures alignment with global economic trends and investment goals.

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 Efficient Frontier analysis suggests that the portfolio is well-positioned for risk versus return optimization. Adjusting the current asset allocation could further enhance this balance, offering the best possible risk-return ratio without necessarily increasing diversification. Ensuring the portfolio remains on the Efficient Frontier can help achieve investment goals more effectively, although it's important to consider individual risk tolerance and objectives when making adjustments.

Dividends Info

  • Vanguard Total Bond Market Index Fund ETF Shares 3.70%
  • Schwab U.S. Dividend Equity ETF 3.60%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.30%
  • The Real Estate Select Sector SPDR Fund 2.40%
  • Weighted yield (per year) 2.24%

The portfolio's total dividend yield is 2.24%, with contributions from various holdings. Dividends provide a steady income stream, which can be particularly attractive during periods of market volatility. This yield aligns with typical balanced portfolios, offering a mix of growth and income. For investors seeking higher income, increasing exposure to dividend-focused assets may be beneficial. However, it's crucial to balance yield with growth potential to maintain long-term performance.

Ongoing product costs Info

  • Vanguard Total Bond Market Index Fund ETF Shares 0.03%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • The Real Estate Select Sector SPDR Fund 0.09%
  • Weighted costs total (per year) 0.05%

The portfolio's total expense ratio (TER) is impressively low at 0.05%, supporting better long-term performance by minimizing costs. Low fees are crucial for maximizing returns, as they compound over time. This alignment with best practices ensures more of the portfolio's returns are retained by the investor. Regularly reviewing and comparing costs against alternatives can help maintain cost efficiency and enhance overall returns.

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