A balanced portfolio with a strong focus on U.S. stocks and technology exposure

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

What type of investor this portfolio is suitable for

Balanced Investors

This portfolio suits an investor with a balanced risk tolerance, seeking moderate growth and willing to accept some volatility. Ideal for those with a medium to long-term investment horizon, it focuses on U.S. equities and tech sectors, offering potential for capital appreciation. It's well-suited for individuals looking to balance growth with diversification.

Positions

  • Vanguard Total Stock Market Index Fund ETF Shares
    VTI - US9229087690
    55.00%
  • Vanguard Total International Stock Index Fund ETF Shares
    VXUS - US9219097683
    25.00%
  • Invesco NASDAQ 100 ETF
    QQQM - US46138G6492
    10.00%
  • Fidelity® MSCI Information Technology Index ETF
    FTEC - US3160928087
    5.00%
  • Vanguard Total World Stock Index Fund ETF Shares
    VT - US9220427424
    5.00%

The portfolio is composed of five ETFs with a heavy emphasis on U.S. equities, making up 55% of the allocation. International exposure is 25%, and technology-focused funds account for an additional 15%. This structure provides broad diversification but leans heavily toward the U.S. and tech sectors. Comparatively, a benchmark might have a more balanced global allocation. To enhance diversification, consider increasing exposure to underrepresented regions or sectors.

Growth Info

Historically, this portfolio has performed well, with a Compound Annual Growth Rate (CAGR) of 11.45%. This indicates strong growth, but it's important to note the maximum drawdown of -27.33%, which highlights potential volatility. Compared to benchmarks, this performance is commendable, yet investors should be prepared for similar fluctuations in the future. To mitigate risk, consider adding more stable assets that may reduce drawdowns.

Projection Info

The Monte Carlo simulation, which uses historical data to project future outcomes, suggests a median return of 315.5% over the investment horizon. This indicates potential for substantial growth, but the 5th percentile projection of 31.1% underscores the inherent uncertainty. While simulations can guide expectations, they are not guarantees. Diversifying further could help in managing the range of possible outcomes.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%
  • Other
    0%
  • No data
    0%

The portfolio is heavily weighted toward stocks at 99%, with minimal cash holdings. While this can drive growth, it also increases exposure to market volatility. A more balanced allocation might include bonds or other asset classes to cushion against market downturns. This would align better with typical benchmarks that often include a mix of equities and fixed income.

Sectors Info

  • Technology
    31%
  • Financials
    14%
  • Consumer Discretionary
    11%
  • Industrials
    9%
  • Health Care
    9%
  • Telecommunications
    8%
  • Consumer Staples
    5%
  • Energy
    3%
  • Basic Materials
    3%
  • Real Estate
    2%
  • Utilities
    2%

Technology dominates the sector allocation at 31%, significantly higher than typical benchmarks. While tech can offer high returns, it also brings higher volatility, especially during periods of interest rate changes. Diversifying into other sectors like healthcare or energy could reduce risk and provide more stability. This would better align with a balanced sector distribution.

Regions Info

  • North America
    75%
  • Europe Developed
    11%
  • Asia Emerging
    4%
  • Japan
    4%
  • Asia Developed
    3%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    1%
  • Europe Emerging
    0%

The portfolio's geographic allocation is heavily skewed towards North America at 75%, with limited exposure to emerging markets. This concentration could limit growth opportunities in other regions. Diversifying geographically to include more emerging markets or underrepresented areas could enhance returns and reduce regional risk, aligning more closely with global benchmarks.

Market capitalization Info

  • Mega-cap
    44%
  • Large-cap
    31%
  • Mid-cap
    18%
  • Small-cap
    5%
  • Micro-cap
    1%

The portfolio favors large-cap stocks, with mega and big caps comprising 75%. While these provide stability, the limited exposure to mid and small caps may restrict growth potential. Including more mid and small-cap stocks could offer higher growth opportunities and better diversification, aligning with benchmarks that typically have a broader market cap distribution.

Redundant positions Info

  • Fidelity® MSCI Information Technology Index ETF
    Invesco NASDAQ 100 ETF
    High correlation
  • Vanguard Total World Stock Index Fund ETF Shares
    Vanguard Total Stock Market Index Fund ETF Shares
    High correlation

The portfolio contains highly correlated assets, particularly within tech-focused ETFs. This correlation can limit diversification benefits, as these assets tend to move together, especially during market downturns. Reducing exposure to overlapping assets can enhance diversification and mitigate risk, creating a more resilient portfolio.

Dividends Info

  • Fidelity® MSCI Information Technology Index ETF 0.40%
  • Invesco NASDAQ 100 ETF 0.60%
  • Vanguard Total World Stock Index Fund ETF Shares 1.60%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.40%
  • Vanguard Total International Stock Index Fund ETF Shares 2.80%
  • Weighted yield (per year) 1.63%

The portfolio's dividend yield is 1.63%, with the Vanguard Total International Stock Index Fund ETF offering the highest yield at 2.80%. Dividends can provide steady income and reduce reliance on capital gains. For investors seeking income, increasing allocation to higher-yielding assets could be beneficial. This would also align with income-focused benchmarks.

Ongoing product costs Info

  • Fidelity® MSCI Information Technology Index ETF 0.08%
  • Invesco NASDAQ 100 ETF 0.15%
  • Vanguard Total World Stock Index Fund ETF Shares 0.07%
  • Vanguard Total Stock Market Index Fund ETF Shares 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 a positive aspect for long-term performance. Lower costs mean more of your returns are retained, which can significantly impact growth over time. This cost efficiency aligns well with best practices and contributes to the portfolio's overall effectiveness.

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.

The portfolio's current asset mix suggests potential for optimization through the Efficient Frontier, which identifies the best risk-return ratio. However, addressing the high correlation among certain ETFs should be a priority before optimizing. This will ensure that the efficiency gains are not offset by unnecessary risks tied to overlapping assets.

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