A balanced portfolio with strong emphasis on US equities and moderate diversification

Report created on Jan 19, 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 heavily weighted towards the Vanguard S&P 500 ETF, making up nearly 69% of the total allocation. This signifies a strong focus on large-cap US stocks, providing broad market exposure. The remaining assets include small-cap value stocks, international equities, and a small allocation to a single stock and a sector-specific ETF. Compared to common benchmarks, this portfolio leans heavily on US equities, which may limit global diversification. To enhance diversification, consider increasing exposure to international equities or other asset classes like bonds or real estate.

Growth Info

Historically, the portfolio has shown a strong CAGR of 12.42%, indicating robust growth over time. However, it experienced a maximum drawdown of -24.12%, reflecting significant volatility during market downturns. This performance, while impressive, should be viewed in context with broader market trends and benchmarks like the S&P 500. To mitigate future drawdowns, consider diversifying across more asset classes or increasing cash reserves. Remember, past performance does not guarantee future results.

Projection Info

The Monte Carlo simulation, which uses historical data to forecast future outcomes, predicts a positive outlook for this portfolio. With a median projected return of 521.9%, most simulations suggest substantial growth. However, the 5th percentile projection of 32.18% highlights the potential for lower returns in adverse scenarios. Although Monte Carlo analysis provides valuable insights, it's important to remember that these projections are not certainties. Regularly reviewing and adjusting the portfolio based on market conditions can help manage risk and capitalize on opportunities.

Asset classes Info

  • Stocks
    100%

The portfolio is almost entirely composed of stocks, with a minor cash allocation. This heavy stock concentration may lead to higher volatility, especially during market downturns. Compared to more diversified portfolios that include bonds or alternative assets, this one might experience greater fluctuations. To reduce risk, consider diversifying into other asset classes. Including bonds or real estate investments could provide more stability and reduce overall portfolio volatility.

Sectors Info

  • Technology
    28%
  • Financials
    15%
  • Consumer Discretionary
    11%
  • Industrials
    10%
  • Consumer Staples
    9%
  • Health Care
    9%
  • Telecommunications
    7%
  • Energy
    5%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    2%

The sector allocation is notably tech-heavy, with technology making up over 28% of the portfolio. This concentration may lead to increased volatility, especially during periods of tech sector instability. Other sectors like financial services and consumer cyclicals are also well-represented, offering some balance. Compared to common benchmarks, this portfolio's sector distribution could benefit from more even weighting. Consider reallocating funds to underrepresented sectors to enhance diversification and mitigate sector-specific risks.

Regions Info

  • North America
    91%
  • Europe Developed
    6%
  • Japan
    2%
  • Australasia
    1%

Geographically, the portfolio is heavily skewed towards North America, with over 90% exposure. This limits the benefits of international diversification and increases vulnerability to regional economic downturns. Compared to global benchmarks, this allocation is less diversified. Increasing exposure to emerging markets or other developed regions could enhance diversification and potentially capture growth opportunities in other parts of the world. A more global approach may also reduce the impact of local market fluctuations.

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 be optimized using the Efficient Frontier, which balances risk and return for the given assets. Currently, the portfolio may not be fully efficient, as it relies heavily on a few key holdings. Adjusting allocations to achieve a more optimal risk-return ratio could enhance performance. This optimization focuses solely on the current assets, so consider rebalancing to improve efficiency. Remember, efficiency is about maximizing returns for a given level of risk, not necessarily achieving diversification.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.60%
  • BNY Mellon International Equity ETF 2.50%
  • Costco Wholesale Corp 0.50%
  • Invesco PHLX Semiconductor ETF 0.60%
  • Vanguard S&P 500 ETF 1.20%
  • Weighted yield (per year) 1.33%

The portfolio's dividend yield is relatively modest at 1.33%, with contributions from various ETFs and individual stocks. While dividends can provide a steady income stream, this yield is lower than some income-focused portfolios. For investors seeking higher income, consider increasing exposure to dividend-paying stocks or funds. However, it's crucial to balance income needs with growth objectives, ensuring the portfolio aligns with long-term financial goals.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • BNY Mellon International Equity ETF 0.04%
  • Invesco PHLX Semiconductor ETF 0.19%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.07%

The portfolio's total expense ratio (TER) is impressively low at 0.07%, thanks to the inclusion of low-cost ETFs. This cost efficiency supports better long-term performance by minimizing fees that can erode returns. Keeping costs low is a key advantage, allowing more of the portfolio's growth to benefit the investor. Regularly reviewing and comparing fund fees can help maintain this cost advantage, ensuring the portfolio remains competitive in terms of expenses.

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