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A highly diversified balanced portfolio with a strong focus on North American equities

Report created on Dec 21, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification

Positions

The portfolio is composed of a balanced mix of ETFs, with a significant 40% allocation to the Vanguard Total Stock Market Index Fund. This indicates a strong emphasis on capturing the broad U.S. market. The inclusion of international stocks, commodities, real estate, currency, and bonds further enhances diversification. Compared to common benchmarks, this composition is well-aligned with a balanced investment strategy, which typically includes a mix of equities, bonds, and other asset classes. This diversified structure is beneficial for managing risk and achieving steady growth over time.

Growth Info

Historically, the portfolio has delivered a Compound Annual Growth Rate (CAGR) of 9.87%, which is commendable for a balanced portfolio. The maximum drawdown of -28.79% indicates the potential risk during market downturns. Comparing this to benchmarks, the returns are competitive, though the drawdown suggests vulnerability to market volatility. While past performance is not indicative of future results, this history provides confidence in the portfolio's ability to generate returns. It might be beneficial to consider strategies to mitigate drawdowns, such as adjusting asset allocations or incorporating defensive assets.

Projection Info

Utilizing Monte Carlo simulations, which use historical data to project future outcomes, the portfolio shows a 50th percentile return of 134.7% and a 67th percentile of 208.05%. While 919 out of 1,000 simulations resulted in positive returns, it's important to note that simulations are not guarantees. The projected annualized return of 7.44% suggests potential for growth, but investors should be mindful of the 5th percentile outcome of -15.58%, indicating possible losses. Regularly reviewing the portfolio and adjusting allocations based on changing market conditions can help manage these risks.

Asset classes Info

  • Stocks
    66%
  • Bonds
    13%
  • Cash
    11%
  • Real Estate
    10%

The portfolio is primarily allocated across stocks (66.37%), bonds (12.98%), and real estate (10%), with smaller allocations to cash and other assets. This distribution aligns with a balanced investment approach, offering growth potential through equities while maintaining stability with bonds and real estate. Compared to benchmarks, the allocation is consistent with diversified portfolios, which often aim for a mix of growth and income. To further enhance diversification, consider increasing exposure to underrepresented asset classes, ensuring a well-rounded portfolio that can weather various market conditions.

Sectors Info

  • Technology
    16%
  • Real Estate
    12%
  • Financials
    11%
  • Industrials
    8%
  • Health Care
    7%
  • Consumer Discretionary
    7%
  • Telecommunications
    5%
  • Consumer Staples
    4%
  • Basic Materials
    3%
  • Energy
    3%
  • Utilities
    2%

Sector allocation is well-diversified, with technology (15.86%), real estate (11.99%), and financial services (11.04%) being the largest. This balance aligns closely with benchmark indices, providing exposure to various economic drivers. However, a high concentration in technology could lead to increased volatility, especially during periods of regulatory changes or interest rate hikes. Maintaining a diversified sector allocation helps mitigate risks associated with sector-specific downturns. Regularly monitoring sector performance and adjusting weights can ensure the portfolio remains aligned with market trends and investor goals.

Regions Info

  • North America
    52%
  • Europe Developed
    10%
  • Asia Emerging
    4%
  • Japan
    4%
  • Asia Developed
    3%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographic exposure is predominantly North American (51.98%), with smaller allocations to Europe, Asia, and other regions. This focus on North America aligns with the portfolio's balanced risk profile, offering stability and growth potential from developed markets. However, the limited exposure to emerging markets could mean missed opportunities for higher returns. Diversifying geographically can help reduce risk and capture growth from different economic cycles. Consider increasing allocations to underrepresented regions, ensuring the portfolio is well-positioned to benefit from global economic developments.

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.

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The portfolio's risk-return profile can be optimized using the Efficient Frontier, which identifies the best possible risk-return ratio based on the current assets. This means adjusting allocations to achieve maximum return for a given level of risk. While the portfolio is already diversified, exploring reallocation within existing assets could enhance efficiency. It's important to note that this optimization considers only the current assets and doesn't imply broader diversification or goal alignment. Regularly revisiting the Efficient Frontier can ensure the portfolio remains aligned with investor objectives.

Dividends Info

  • Vanguard Long-Term Bond Index Fund ETF Shares 4.60%
  • Direxion Auspice Broad Commodity Strategy ETF 3.30%
  • WisdomTree Bloomberg U.S. Dollar Bullish Fund 6.20%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.90%
  • Vanguard Total International Stock Index Fund ETF Shares 1.60%
  • The Real Estate Select Sector SPDR Fund 2.40%
  • Weighted yield (per year) 2.09%

The portfolio's overall dividend yield is 2.09%, contributing to returns through income generation. The WisdomTree Bloomberg U.S. Dollar Bullish Fund offers the highest yield at 6.2%, providing a steady income stream. Dividends are essential for investors seeking regular income or reinvesting for compound growth. This yield is competitive, aligning with balanced portfolios that aim for both growth and income. To enhance income potential, consider reallocating to higher-yielding assets while maintaining diversification. This strategy can increase cash flow without significantly altering the portfolio's risk profile.

Ongoing product costs Info

  • Vanguard Long-Term Bond Index Fund ETF Shares 0.04%
  • Direxion Auspice Broad Commodity Strategy ETF 0.80%
  • WisdomTree Bloomberg U.S. Dollar Bullish Fund 0.50%
  • 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) 0.16%

The portfolio's total expense ratio (TER) is 0.16%, which is impressively low and supports better long-term performance. Lower costs mean more returns stay in the portfolio, enhancing compounding over time. The Vanguard funds, with TERs as low as 0.03%, exemplify cost-efficient investing. Compared to industry averages, these costs are favorable, aligning with best practices for minimizing expenses. Regularly reviewing and optimizing for lower-cost alternatives can further improve net returns. This focus on cost efficiency is a strong indicator of a well-managed portfolio.

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