A balanced portfolio with broad diversification and strong dividend focus

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 is composed of 79.44% stocks, 10% real estate, 9.85% bonds, and a small cash allocation. This structure is well-aligned with a balanced investment strategy, mixing growth and income-generating assets. Compared to typical benchmarks, it shows a strong equity focus, which can offer higher growth potential. Maintaining this balance is crucial for achieving a steady risk-return profile. Consider periodically reviewing the allocation to ensure it aligns with evolving market conditions and personal financial goals.

Growth Info

Historically, the portfolio has achieved a Compound Annual Growth Rate (CAGR) of 11.43%, indicating strong performance over time. However, it experienced a maximum drawdown of -32.32%, highlighting the risks during market downturns. This level of volatility is typical for equity-heavy portfolios. Comparing this performance to a benchmark can help gauge how well the portfolio has fared relative to the market. While past performance is not a guarantee of future results, it provides a useful context for understanding potential risks and rewards.

Projection Info

The Monte Carlo simulation, which uses historical data to project future outcomes, predicts a median return of 200.18% over the investment horizon. With 970 out of 1,000 simulations showing positive returns, the outlook seems promising. However, it's important to acknowledge that simulations are based on historical trends and assumptions, which may not hold true in the future. Regularly updating these projections with the latest data can help maintain a realistic perspective on potential returns and risks.

Asset classes Info

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

The portfolio's asset class allocation includes a high percentage of stocks, moderate real estate exposure, and a smaller bond component. This mix provides a balance between growth and stability, aligning with a broadly diversified strategy. Compared to common benchmarks, the equity allocation is higher, which could lead to increased volatility. Diversifying further within asset classes, such as adding international bonds or alternative investments, may enhance risk management and return potential.

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%

Sector diversification is evident, with notable allocations in technology, financial services, and real estate. This balance aligns well with typical benchmarks, offering exposure to various economic sectors. However, the technology sector's 18.95% weighting could lead to increased volatility, especially during market shifts like interest rate changes. Regularly reviewing sector allocations can help maintain a diversified approach and adjust for emerging trends or sector-specific risks.

Regions Info

  • North America
    76%
  • Europe Developed
    6%
  • Asien Schwellenländer
    2%
  • Japan
    2%
  • Asien
    2%
  • Australasia
    1%
  • Afrika/Mittlerer Osten
    1%

The portfolio's geographic exposure is heavily weighted towards North America at 75.87%, with limited allocations to other regions. While this may align with the investor's home country bias, it could limit diversification benefits. Comparing this to global benchmarks, the portfolio is underexposed to emerging markets, which may offer growth opportunities. Considering a more balanced geographic distribution could enhance diversification and mitigate regional risks.

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 can be optimized using the Efficient Frontier, which identifies the best possible risk-return ratio based on current assets. This means adjusting allocations to achieve maximum returns for a given level of risk. While this approach focuses on efficiency, it's important to balance it with diversification and other investment goals. Periodically reassessing the portfolio's position on the Efficient Frontier can help ensure it remains aligned with the investor's risk tolerance and objectives.

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 dividend yield stands at 2.24%, contributing to overall returns and providing a steady income stream. This is particularly relevant for investors seeking income generation alongside capital appreciation. High-yield assets like the Schwab U.S. Dividend Equity ETF and Vanguard Total Bond Market Index Fund play a key role here. Monitoring dividend yields and adjusting allocations as needed can help maintain an optimal balance between income and growth.

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%

With a Total Expense Ratio (TER) of 0.05%, the portfolio is impressively cost-efficient. Low costs enhance long-term performance by reducing the drag on returns. This aligns well with best practices in portfolio management, where minimizing fees is crucial for maximizing net returns. Regularly reviewing and comparing fund fees can ensure the portfolio remains cost-effective, especially as new, lower-cost investment options become available.

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