A balanced portfolio with a strong focus on US equities and dividend income

Report created on Feb 10, 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 composed entirely of ETFs, with a notable 40% allocation to the Vanguard Total Stock Market Index Fund ETF, emphasizing broad exposure to the US market. It also includes a 20% allocation each to Avantis U.S. Small Cap Value ETF, BNY Mellon International Equity ETF, and Schwab U.S. Dividend Equity ETF. Compared to a typical balanced benchmark, this portfolio has a strong tilt towards equities, with no fixed income or alternative investments, which might expose it to higher market volatility.

Growth Info

Historically, the portfolio has demonstrated a robust CAGR of 18.60%, significantly outperforming many traditional balanced benchmarks. However, it faced a maximum drawdown of -22.10%, indicating potential vulnerability during market downturns. The concentration of returns in just 29 days suggests a reliance on specific market events or trends. While past performance is impressive, it's crucial to remember that historical results do not guarantee future outcomes.

Projection Info

The Monte Carlo simulation, which uses historical data to project potential future outcomes, shows a wide range of possible results. The median outcome suggests a portfolio growth of 1,024%, while the 5th percentile indicates a much lower growth of 250.9%. Although all simulations resulted in positive returns, the variance highlights the inherent uncertainty in projections. Investors should use these simulations as a guide rather than a prediction.

Asset classes Info

  • Stocks
    100%

The portfolio's allocation is heavily concentrated in stocks, providing no exposure to bonds or alternative asset classes. While this can enhance growth potential, it also increases exposure to equity market volatility. A more diversified asset allocation could potentially reduce risk. Comparing this to a typical balanced benchmark, which includes bonds, the portfolio could benefit from adding fixed income to stabilize returns during market fluctuations.

Sectors Info

  • Financials
    19%
  • Technology
    18%
  • Industrials
    13%
  • Consumer Discretionary
    12%
  • Health Care
    10%
  • Energy
    8%
  • Consumer Staples
    7%
  • Telecommunications
    6%
  • Basic Materials
    4%
  • Real Estate
    2%
  • Utilities
    2%

Sector allocation shows a balanced spread across various industries, with notable weights in financial services (19%) and technology (18%). This aligns well with common market benchmarks, providing a diversified sector exposure. However, the technology sector's high allocation might introduce volatility, especially during interest rate changes. Regularly reviewing sector trends can help maintain a balanced risk profile and adapt to market changes.

Regions Info

  • North America
    82%
  • Europe Developed
    11%
  • Japan
    4%
  • Australasia
    1%
  • Asia Developed
    1%

The geographic allocation is predominantly focused on North America (82%), with limited exposure to other regions. This concentration may limit diversification benefits and expose the portfolio to regional economic risks. Compared to global benchmarks, which often have more balanced geographic distributions, increasing allocations to international markets could enhance diversification and potentially reduce risk associated with US market dependence.

Market capitalization Info

  • Large-cap
    33%
  • Mega-cap
    26%
  • Mid-cap
    16%
  • Small-cap
    14%
  • Micro-cap
    10%

The portfolio exhibits a diverse allocation across market capitalizations, with a significant focus on large-cap stocks (59% combined for big and mega-cap). This provides stability and lower volatility compared to smaller companies. However, the inclusion of small (14%) and micro-cap (10%) stocks adds growth potential. Balancing these allocations against market benchmarks can help achieve a desired risk-return profile suitable for various market conditions.

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 could potentially benefit from optimization using the Efficient Frontier, which seeks to achieve the best possible risk-return ratio with the current assets. This involves adjusting asset allocations to maximize returns for a given level of risk or minimize risk for a desired return. While the portfolio is well-structured, exploring small adjustments can further enhance its efficiency without drastically altering its composition.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.60%
  • BNY Mellon International Equity ETF 2.40%
  • Schwab U.S. Dividend Equity ETF 3.60%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Weighted yield (per year) 2.00%

With a total dividend yield of 2.00%, the portfolio provides a steady income stream, supported by the Schwab U.S. Dividend Equity ETF's yield of 3.60%. Dividends can offer stability during market volatility, making this portfolio suitable for income-focused investors. However, relying solely on dividends may not suffice for all income needs, and reinvesting dividends can further enhance growth potential over time.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • BNY Mellon International Equity ETF 0.04%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.08%

The portfolio boasts a low total expense ratio (TER) of 0.08%, which is advantageous for long-term growth as it minimizes the drag on returns. This cost efficiency is comparable to, or better than, many industry benchmarks, supporting better compounding over time. Keeping costs low is a critical component in maximizing net returns, and the current TER aligns well with best practices for cost management.

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