A balanced portfolio with strong US focus and moderate diversification for stable growth

Report created on Dec 30, 2024

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 composed of a mix of funds and ETFs, with a significant allocation to equities at 85.24%. Bonds make up 12.51%, while a small portion is held in cash and other assets. This composition aligns with a balanced risk profile, offering potential for growth while maintaining some defensive characteristics. Compared to typical balanced portfolios, this one has a slightly higher equity exposure, which may enhance returns during bullish market phases. It is advisable to periodically review the allocation to ensure it remains in line with your risk tolerance and investment goals.

Growth Info

Historically, the portfolio has performed well with a CAGR of 10.6%, indicating strong growth over time. The maximum drawdown of -19.02% reflects the potential risk during market downturns. This performance is comparable to benchmark indices, suggesting effective asset selection. However, past performance is not a guarantee of future results. It's essential to consider that market conditions can change, and maintaining a diversified approach is crucial to managing volatility and ensuring steady returns.

Projection Info

Forward projections using Monte Carlo simulations suggest a positive outlook, with an annualized return of 11.04%. The simulations indicate a high probability of positive returns, with 990 out of 1,000 scenarios showing gains. Monte Carlo analysis uses historical data to model potential future outcomes, but it's important to note that these are not predictions. They provide a range of possibilities, highlighting the importance of maintaining flexibility and readiness to adjust the portfolio as needed.

Asset classes Info

  • Stocks
    85%
  • Bonds
    13%
  • Cash
    2%

The portfolio's asset class distribution is heavily weighted towards stocks, which comprise over 85% of the allocation. This high equity exposure is typical for growth-focused strategies, offering potential for substantial capital appreciation. However, the limited bond allocation might reduce cushioning during market downturns. To enhance diversification, consider balancing the asset classes with more fixed-income investments, which can provide stability and income during volatile periods.

Sectors Info

  • Technology
    21%
  • Financials
    17%
  • Industrials
    13%
  • Health Care
    10%
  • Telecommunications
    7%
  • Consumer Staples
    6%
  • Consumer Discretionary
    6%
  • Consumer Discretionary
    5%
  • Energy
    5%
  • Utilities
    4%
  • Basic Materials
    4%
  • Real Estate
    2%

Sector allocation is diverse, with significant exposure to technology, financial services, and industrials. This distribution mirrors common benchmarks, indicating a well-rounded approach. Notably, the technology sector's substantial weight suggests potential for higher returns, albeit with increased volatility. It is beneficial to monitor sector trends and consider rebalancing if any sector becomes overly dominant, ensuring the portfolio remains aligned with broader market movements and your investment strategy.

Regions Info

  • North America
    81%
  • Europe Developed
    11%
  • Japan
    4%
  • Australasia
    2%
  • Asia Developed
    1%

Geographically, the portfolio is heavily concentrated in North America, representing over 80% of the allocation. This focus on US markets aligns with typical domestic investor preferences but limits exposure to international growth opportunities. Diversifying geographically can reduce country-specific risks and tap into global economic trends. Consider expanding allocations to underrepresented regions, such as emerging markets, to enhance diversification and potential returns.

Redundant positions Info

  • SPDR® S&P 1500 Value Tilt ETF
    Capital Group Dividend Value ETF
    SPDR® Russell 1000 Low Volatility Focus ETF
    High correlation

The portfolio includes highly correlated assets, particularly among US-focused ETFs. High correlation means these assets tend to move together, potentially limiting diversification benefits. For improved risk management, consider replacing some of these correlated assets with those that have lower correlation to the rest of the portfolio. This strategy can help reduce overall volatility and enhance the portfolio's resilience during 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 can benefit from optimization using the Efficient Frontier, which seeks the best risk-return ratio. Currently, the presence of highly correlated assets suggests room for improvement. By adjusting the allocation among existing assets, it's possible to enhance efficiency without adding new holdings. This process involves finding the optimal mix that maximizes returns for a given level of risk, ensuring the portfolio is working as effectively as possible towards your financial goals.

Dividends Info

  • Capital Group Dividend Value ETF 1.10%
  • FIDELITY ADVISOR STRATEGIC INCOME FUND FIDELITY STRATEGIC INCOME FUND 3.80%
  • Fidelity Total Market Index Fund 0.20%
  • Invesco S&P International Developed Momentum ETF 2.00%
  • Legg Mason International Low Volatility High Dividend ETF 5.00%
  • SPDR® Russell 1000 Low Volatility Focus ETF 1.20%
  • SPDR S&P World ex US 1.80%
  • SPDR® S&P 1500 Value Tilt ETF 1.40%
  • Weighted yield (per year) 1.60%

The portfolio's dividend yield stands at 1.6%, with notable contributions from the Legg Mason International Low Volatility High Dividend ETF and the Fidelity Advisor Strategic Income Fund. Dividends provide a steady income stream and can be a key component of total returns, especially in low-interest-rate environments. Regularly reviewing the dividend yield and its sources can help ensure that the portfolio continues to meet income objectives, while also considering potential for capital growth.

Ongoing product costs Info

  • Capital Group Dividend Value ETF 0.33%
  • FIDELITY ADVISOR STRATEGIC INCOME FUND FIDELITY STRATEGIC INCOME FUND 0.66%
  • Fidelity Total Market Index Fund 0.02%
  • Invesco S&P International Developed Momentum ETF 0.25%
  • Legg Mason International Low Volatility High Dividend ETF 0.40%
  • SPDR® Russell 1000 Low Volatility Focus ETF 0.20%
  • SPDR S&P World ex US 0.03%
  • SPDR® S&P 1500 Value Tilt ETF 0.12%
  • Weighted costs total (per year) 0.21%

The portfolio's total expense ratio (TER) is 0.21%, which is relatively low and supports better long-term performance by minimizing costs. Lower fees mean more of your investment's returns are retained, enhancing compounding over time. This cost efficiency is a positive aspect, but it's still important to periodically review each asset's fees. Consider whether lower-cost alternatives could further reduce expenses without compromising the portfolio's strategic objectives.

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