Balanced portfolio with strong tech focus and global diversification for moderate risk investors
Report created on Jan 6, 2025Risk profile
4/7
Diversification profile
5/5
Positions
-
VI VANGUARD INFORMATION TECHNOLOGY INDEX FUND ADMIRAL SHARES
VITAX - US92204A7937 30.00% -
EI iShares MSCI Israel ETF
EIS - US4642866325 20.00% -
IL INVESCO INCOME ALLOCATION FUND CLASS R5
ILAAX 20.00% -
VB Vanguard Total Bond Market Index Fund Admiral Shares
VBTLX - US9219376038 10.00% -
VE VANGUARD EMERGING MARKETS STOCK INDEX FUND ADMIRAL SHARES
VEMAX - US9220428414 10.00% -
VT Vanguard Total World Stock Index Fund
VTWAX 10.00%
The portfolio is composed of a mix of funds and ETFs, with a significant 30% allocation to a technology index fund, reflecting a strong tech focus. The rest is spread across various funds, including an Israel ETF and a total bond market fund. This structure aligns with a balanced portfolio aiming for growth while managing risk. Compared to a common benchmark, the tech concentration is notable, which can drive returns but also increase volatility. Consider adjusting allocations for more sector balance to optimize risk management.
Growth
The portfolio has shown a solid historic performance with a CAGR of 12.35%, indicating strong growth over time. However, it experienced a maximum drawdown of -28.86%, highlighting potential vulnerability during market downturns. This performance, when compared to benchmarks, suggests the portfolio has outperformed in growth phases but may need better risk management strategies. To mitigate drawdowns, consider incorporating more defensive assets or adjusting allocations to reduce volatility during market stress.
Projection
The forward projection using Monte Carlo simulation, which uses historical data to predict future outcomes, shows promising potential. With a 50th percentile outcome of 234.14% and a high probability of positive returns, the portfolio is positioned well for future growth. However, it's important to remember that these projections are based on past data and assumptions, which may not always predict future market conditions accurately. Regularly reviewing and adjusting the portfolio can help align with evolving market trends and personal goals.
Asset classes
- Stocks 76%
- Bonds 23%
- Other 1%
The portfolio has a substantial 75.77% allocation to stocks and 22.76% to bonds, providing a balanced approach between growth and income. This aligns well with a balanced investor profile, offering potential for capital appreciation while maintaining some level of income stability. Compared to common benchmarks, the stock allocation is slightly higher, which can enhance growth but also increase risk. Consider periodically reviewing the bond allocation to ensure it aligns with changing risk tolerance and market conditions.
Sectors
- Technology 45%
- Financials 13%
- Health Care 6%
- Industrials 5%
- Consumer Discretionary 4%
- Telecommunications 4%
- Consumer Staples 3%
- Real Estate 3%
- Basic Materials 2%
- Energy 2%
- Utilities 2%
- Consumer Discretionary 1%
With a 45.29% allocation to technology, the portfolio is heavily weighted towards this sector. While this can capitalize on tech growth, it may also introduce volatility, especially during interest rate changes. Other sectors like financial services and healthcare are represented but in smaller portions. This concentration could limit diversification benefits. To enhance sector balance, consider increasing exposure to underrepresented sectors like utilities or consumer defensive, which may offer stability during market fluctuations.
Regions
- North America 54%
- Africa/Middle East 18%
- No data 10%
- Asia Emerging 8%
- Europe Developed 4%
- Asia Developed 3%
- Japan 1%
- Latin America 1%
The portfolio is predominantly exposed to North America at 54.24%, with notable allocations in the Middle East and Emerging Asia. This geographic diversity can help mitigate region-specific risks and capture global growth opportunities. However, the 10% allocation to unknown regions could indicate a lack of clarity in geographic diversification. To optimize geographic exposure, consider increasing allocations to regions like Europe or Japan, which may provide additional diversification and stability.
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 current portfolio composition can be optimized using the Efficient Frontier, which helps find the best possible risk-return ratio. This involves adjusting the existing asset allocations to achieve a more efficient mix. While the portfolio is already diversified, exploring optimization can enhance returns without significantly increasing risk. It's important to remember that this optimization is based solely on current assets, and maintaining diversification and alignment with personal goals should remain a priority.
Dividends
- iShares MSCI Israel ETF 0.70%
- INVESCO INCOME ALLOCATION FUND CLASS R5 3.40%
- Vanguard Total Bond Market Index Fund Admiral Shares 3.40%
- VANGUARD EMERGING MARKETS STOCK INDEX FUND ADMIRAL SHARES 0.70%
- VANGUARD INFORMATION TECHNOLOGY INDEX FUND ADMIRAL SHARES 0.50%
- Vanguard Total World Stock Index Fund 1.20%
- Weighted yield (per year) 1.50%
The portfolio's total dividend yield is 1.5%, with contributions from various funds, including a 3.4% yield from the bond market index fund. Dividends can provide a steady income stream, which is beneficial for investors seeking regular cash flow. The relatively low overall yield suggests a focus on growth rather than income. To increase income potential, consider reallocating towards higher-yielding funds or securities, balancing growth and income according to personal financial goals.
Ongoing product costs
- iShares MSCI Israel ETF 0.59%
- INVESCO INCOME ALLOCATION FUND CLASS R5 0.62%
- Vanguard Total Bond Market Index Fund Admiral Shares 0.05%
- VANGUARD EMERGING MARKETS STOCK INDEX FUND ADMIRAL SHARES 0.14%
- VANGUARD INFORMATION TECHNOLOGY INDEX FUND ADMIRAL SHARES 0.10%
- Vanguard Total World Stock Index Fund 0.10%
- Weighted costs total (per year) 0.30%
With a total expense ratio (TER) of 0.3%, the portfolio benefits from low costs, enhancing long-term returns. This is a positive aspect, as lower fees mean more of your money is working for you. The costs are impressively low compared to industry averages, supporting better performance over time. To maintain this advantage, regularly review fund fees and explore opportunities to switch to lower-cost alternatives if available, ensuring that cost efficiency remains a priority.
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