A balanced portfolio emphasizing US equities with moderate risk and limited international exposure

Report created on Jan 3, 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 predominantly composed of US equity ETFs, with a focus on large-cap stocks. This composition aligns with a balanced risk profile, offering stability through broad market exposure. However, the portfolio's heavy weighting in US equities may limit diversification benefits. To enhance diversification, consider incorporating more international or alternative asset classes. This can help mitigate risks associated with market-specific downturns and provide a buffer against volatility.

Growth Info

Historically, the portfolio has shown a strong CAGR of 14.08%, indicating robust growth. However, it experienced a significant max drawdown of -33.23%, highlighting potential vulnerability during market downturns. The performance is comparable to major indices, but the concentration in US equities can amplify risk. Consider diversifying across more geographies and asset classes to reduce drawdown risk and enhance stability. Remember, past performance does not guarantee future results, so continuous monitoring is crucial.

Projection Info

Monte Carlo simulations, which use historical data to project future outcomes, suggest a wide range of potential returns. The median projection shows a promising 412.21% increase, but outcomes vary significantly. While simulations provide insights, they rely on past data and assumptions, which may not reflect future conditions. Regularly reassessing your portfolio's risk and return expectations is essential to stay aligned with your investment goals and market changes.

Asset classes Info

  • Stocks
    100%

With over 99% allocation in stocks, the portfolio is heavily equity-focused. This concentration can lead to higher volatility, especially during market downturns. Diversification across asset classes, such as bonds or commodities, could provide a cushion against equity market fluctuations. By spreading investments across different asset types, you can potentially achieve a more balanced risk-return profile and reduce overall portfolio risk.

Sectors Info

  • Technology
    31%
  • Health Care
    14%
  • Financials
    13%
  • Consumer Discretionary
    11%
  • Telecommunications
    9%
  • Industrials
    8%
  • Consumer Staples
    6%
  • Energy
    3%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    2%

The portfolio is tech-heavy, with over 30% in technology, which aligns with current market trends but may increase volatility. Sector concentration can lead to higher risk, especially if the sector experiences downturns. Consider balancing the sector allocation by increasing exposure to underrepresented areas like utilities or real estate. This can provide stability and reduce dependency on a single sector's performance.

Regions Info

  • North America
    90%
  • Europe Developed
    10%

Geographically, the portfolio is predominantly invested in North America, with limited exposure to Europe and minimal investments in other regions. This concentration could lead to regional risk, especially if the US market underperforms. To enhance geographic diversification, consider increasing exposure to emerging markets or other developed regions. This strategy can help mitigate regional risks and capitalize on global growth opportunities.

Redundant positions Info

  • Vanguard Total Stock Market Index Fund ETF Shares
    Schwab U.S. Large-Cap Growth ETF
    Vanguard S&P 500 ETF
    High correlation

The portfolio contains highly correlated US equity ETFs, which may limit diversification benefits. Correlated assets tend to move together, reducing the portfolio's ability to withstand market downturns. To enhance diversification, consider replacing some correlated assets with those having lower correlation. This can help balance risk and improve the portfolio's resilience against market volatility.

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.

Before optimizing for risk-return using the Efficient Frontier, address the issue of overlapping, highly correlated assets. Reducing correlations can enhance diversification and improve the portfolio's efficiency. Once correlations are minimized, use optimization techniques to adjust asset weights for the best risk-return balance. This process ensures that the portfolio is not only diversified but also aligned with your risk tolerance and investment goals.

Dividends Info

  • iShares MSCI Switzerland ETF 2.20%
  • Schwab U.S. Dividend Equity ETF 3.60%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Weighted yield (per year) 1.37%

The portfolio's dividend yield stands at 1.37%, with contributions mainly from the Schwab U.S. Dividend Equity ETF. While dividends can provide a steady income stream, the overall yield is modest. If income generation is a priority, consider increasing allocation to higher-yielding assets. However, ensure that the pursuit of higher dividends does not compromise the portfolio's growth potential or risk profile.

Ongoing product costs Info

  • iShares MSCI Switzerland ETF 0.50%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Vanguard S&P 500 ETF 0.03%
  • 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%, supporting long-term performance by minimizing costs. Low fees are beneficial as they enhance net returns, compounding over time. However, always be vigilant of any changes in fund fees and consider lower-cost alternatives if they arise. Maintaining low costs is a crucial component of effective portfolio management and can significantly impact long-term wealth accumulation.

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