A broadly diversified balanced portfolio with strong US focus and moderate risk tolerance

Report created on Jan 21, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio is composed of 14 ETFs, with a significant focus on US equities, representing 25% in SPDR® Portfolio S&P 500 ETF and 20% in Invesco NASDAQ 100 ETF. The remaining assets are spread across mid-cap, small-cap, dividend-paying, and sector-specific ETFs. The portfolio’s structure aligns with a balanced investment approach, offering a mix of growth and income opportunities. The allocation to US equities is notably higher than global benchmarks, which might limit international diversification. Consider assessing whether the current US focus aligns with your long-term goals and risk tolerance.

Growth Info

Historically, the portfolio has delivered strong returns with a CAGR of 13.44%, outperforming many benchmarks. However, it experienced a significant maximum drawdown of -26.94%, indicating vulnerability during market downturns. The fact that 90% of returns occurred in just 19 days highlights the importance of staying invested to capture these gains. While past performance is not a guarantee of future results, it suggests the portfolio has historically balanced risk and reward well. Regularly reviewing performance relative to benchmarks can help ensure it continues to meet your investment objectives.

Projection Info

Forward projections using Monte Carlo simulations suggest a wide range of potential outcomes, with a 50th percentile end portfolio value of 287.7%. This indicates a reasonable expectation of growth, but also highlights the inherent uncertainty in investing. The simulations show a strong likelihood of positive returns, with 969 out of 1,000 simulations yielding gains. However, remember that these projections are based on historical data and assumptions, which may not hold in the future. Continuously monitoring market conditions and adjusting your strategy as needed can help manage this uncertainty.

Asset classes Info

  • Stocks
    90%
  • Cash
    3%
  • Bonds
    3%
  • Other
    3%
  • Real Estate
    3%

The portfolio is heavily weighted towards stocks, making up 90% of the allocation, with minor allocations in cash, bonds, real estate, and other assets. This stock-heavy allocation supports potential growth, but may increase volatility, especially during market fluctuations. Compared to diversified benchmarks, this allocation is more aggressive, potentially suiting investors with a higher risk tolerance. To enhance risk management, consider whether increasing exposure to bonds or other non-equity assets aligns with your risk appetite and investment goals.

Sectors Info

  • Technology
    32%
  • Consumer Discretionary
    11%
  • Financials
    10%
  • Industrials
    9%
  • Health Care
    8%
  • Telecommunications
    7%
  • Consumer Staples
    5%
  • Real Estate
    5%
  • Energy
    3%
  • Basic Materials
    2%
  • Utilities
    2%

With 32% of the portfolio in technology, there is a notable sector concentration, which can lead to higher volatility, especially if interest rates rise or the tech sector faces challenges. The portfolio also includes consumer cyclicals, financial services, and industrials, providing some balance. While this sector allocation might benefit from tech growth, it also exposes the portfolio to sector-specific risks. Consider evaluating whether this concentration aligns with your risk tolerance and whether diversifying into underrepresented sectors could enhance stability.

Regions Info

  • North America
    76%
  • Asia Emerging
    6%
  • Asia Developed
    5%
  • Europe Developed
    3%
  • Japan
    1%
  • Africa/Middle East
    1%
  • Latin America
    1%

The portfolio has a strong North American bias, with 76% of assets allocated to the region. This concentration limits exposure to international markets, which could provide diversification benefits and reduce regional risk. While North America has historically performed well, global diversification can help mitigate potential downturns in the US market. Assess whether increasing allocations to emerging and developed international markets aligns with your goals for geographic diversification and risk management.

Market capitalization Info

  • Mega-cap
    32%
  • Large-cap
    27%
  • Mid-cap
    18%
  • Small-cap
    13%
  • No data
    3%
  • Micro-cap
    1%

The portfolio is diversified across market capitalizations, with 32% in mega-cap and 27% in big-cap stocks. This allocation supports stability and growth potential, as larger companies tend to be more resilient during downturns. However, the 13% allocation to small-cap stocks introduces higher volatility, which can lead to greater risk but also potential for higher returns. Consider whether this balance between stability and growth aligns with your risk tolerance and investment strategy, and adjust as needed to optimize your portfolio.

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 current allocation is not on the Efficient Frontier, suggesting room for optimization. An optimized portfolio at the same risk level could achieve a higher expected return of 2.88%. This optimization involves reallocating existing assets to improve the risk-return ratio. While efficiency focuses on maximizing returns for a given risk, it may not align with other goals like diversification. Consider whether pursuing optimization aligns with your investment strategy and risk tolerance, and explore adjustments that could enhance your portfolio's efficiency.

Dividends Info

  • iShares Core S&P Mid-Cap ETF 1.30%
  • iShares MSCI India ETF 0.80%
  • Invesco NASDAQ 100 ETF 0.60%
  • Schwab U.S. Dividend Equity ETF 3.60%
  • Schwab U.S. REIT ETF 3.20%
  • iShares® 0-3 Month Treasury Bond ETF 5.10%
  • VanEck Semiconductor ETF 0.40%
  • SPDR S&P World ex US 1.80%
  • SPDR® Portfolio Emerging Markets ETF 1.20%
  • SPDR® Portfolio S&P 500 ETF 1.30%
  • Vanguard Small-Cap Growth Index Fund ETF Shares 0.40%
  • Vanguard Short-Term Corporate Bond Index Fund ETF Shares 4.00%
  • Weighted yield (per year) 1.29%

The portfolio's total dividend yield is 1.29%, with the Schwab U.S. Dividend Equity ETF contributing significantly at 3.60%. Dividends provide a steady income stream, which can be particularly valuable during periods of market volatility. This yield aligns with a balanced approach, offering both growth and income. However, the focus on growth-oriented ETFs limits the overall yield. Consider whether increasing your allocation to dividend-focused assets aligns with your income needs and investment goals, especially if stability is a priority.

Ongoing product costs Info

  • iShares MSCI Taiwan ETF 0.59%
  • SPDR® Gold Shares 0.40%
  • iShares Core S&P Mid-Cap ETF 0.05%
  • iShares MSCI India ETF 0.65%
  • Invesco NASDAQ 100 ETF 0.15%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Schwab U.S. REIT ETF 0.07%
  • iShares® 0-3 Month Treasury Bond ETF 0.07%
  • VanEck Semiconductor ETF 0.35%
  • SPDR S&P World ex US 0.03%
  • SPDR® Portfolio Emerging Markets ETF 0.07%
  • SPDR® Portfolio S&P 500 ETF 0.02%
  • Vanguard Small-Cap Growth Index Fund ETF Shares 0.07%
  • Vanguard Short-Term Corporate Bond Index Fund ETF Shares 0.04%
  • Weighted costs total (per year) 0.12%

The portfolio's total expense ratio (TER) is impressively low at 0.12%, supporting better long-term performance by minimizing costs. This cost efficiency is a strong advantage, as lower fees can significantly impact net returns over time. The majority of ETFs in the portfolio have low expense ratios, aligning with best practices for cost management. Continue monitoring and managing costs to ensure they remain competitive, as even small changes in fees can affect overall performance, particularly in a long-term investment strategy.

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