A balanced portfolio with strong North American focus and moderate risk

Report created on Jan 7, 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 mainly composed of stocks, which make up about 97% of the total allocation. This high equity exposure is typical for a balanced profile, aiming to capture growth while accepting some volatility. The remaining allocation is in bonds and cash, providing a minor cushion against market swings. Compared to common benchmarks, this portfolio leans heavily towards equities, which may increase potential returns but also heightens risk. To align more closely with typical balanced benchmarks, consider increasing bond exposure to enhance stability.

Growth Info

Historically, this portfolio has delivered impressive returns with a compound annual growth rate (CAGR) of 25.38%. This high growth rate indicates strong past performance, although it's important to remember that past performance doesn't guarantee future results. The maximum drawdown of -14.52% suggests the portfolio has weathered market downturns reasonably well. To maintain this performance, continue monitoring market conditions and adjust allocations as needed to mitigate potential risks while aiming for growth.

Projection Info

Forward projections using Monte Carlo simulations show a wide range of potential outcomes, with an annualized return of 36.18%. These simulations use historical data to estimate future performance but have limitations as they can't predict market changes. The projections suggest a high probability of positive returns, with 993 out of 1,000 simulations yielding gains. However, it's wise to remain cautious and regularly review the portfolio to adapt to changing market conditions and ensure alignment with investment goals.

Asset classes Info

  • Stocks
    97%
  • Bonds
    2%

The portfolio's asset class allocation is heavily skewed towards equities, with minimal exposure to bonds and cash. This imbalance limits the diversification benefits typically offered by a broader range of asset classes. By incorporating more bonds or alternative investments, the portfolio could achieve better risk management and stability. A more diversified asset allocation would align more closely with common balanced benchmarks, potentially reducing volatility and improving risk-adjusted returns over the long term.

Sectors Info

  • Consumer Staples
    26%
  • Technology
    16%
  • Energy
    14%
  • Financials
    12%
  • Consumer Discretionary
    11%
  • Health Care
    5%
  • Industrials
    4%
  • Telecommunications
    4%
  • Real Estate
    3%
  • Consumer Discretionary
    3%
  • Basic Materials
    1%
  • Utilities
    1%

Sector allocation reveals a significant concentration in consumer defensive and technology sectors, which together comprise over 40% of the portfolio. This concentration can lead to increased vulnerability to sector-specific risks, such as regulatory changes or economic shifts. To enhance diversification, consider increasing exposure to underrepresented sectors like utilities or basic materials. A more balanced sector distribution could mitigate risks associated with market fluctuations and contribute to more stable returns.

Regions Info

  • North America
    91%
  • Europe Developed
    4%
  • Japan
    2%
  • Asia Developed
    1%
  • Asia Emerging
    1%
  • Australasia
    1%

The portfolio is predominantly invested in North America, with over 91% geographic allocation. This strong regional focus may limit exposure to global growth opportunities and increase susceptibility to regional economic downturns. To improve geographic diversification, consider increasing allocations to emerging markets or other developed regions. A more globally diversified portfolio could capitalize on diverse economic growth drivers and reduce the impact of localized market events on overall performance.

Redundant positions Info

  • Schwab U.S. Broad Market ETF
    Xtrackers S&P 500 ESG ETF
    BNY Mellon US Large Cap Core Equity ETF
    Schwab U.S. Large-Cap Growth ETF
    High correlation

Several assets in the portfolio are highly correlated, particularly the Schwab U.S. Broad Market ETF and similar ETFs. High correlation means these assets tend to move in the same direction, which can limit diversification benefits during market downturns. To enhance risk management, consider replacing some of these overlapping assets with alternatives that have lower correlations. This strategy could improve the portfolio's resilience to market volatility and optimize risk-return balance.

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.

Optimizing the portfolio using the Efficient Frontier could enhance the risk-return profile by reallocating assets to achieve the best possible balance. This involves adjusting current allocations without introducing new assets, focusing on maximizing returns for a given level of risk. However, remember that efficiency doesn't equate to diversification; it's about finding the optimal mix of existing holdings. Regularly reassess the portfolio to maintain this balance and ensure alignment with evolving market conditions.

Dividends Info

  • BNY Mellon US Large Cap Core Equity ETF 0.90%
  • Cameco Corp 0.20%
  • Schwab U.S. Broad Market ETF 0.90%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Xtrackers S&P 500 ESG ETF 0.80%
  • Schwab Strategic Trust - Schwab Crypto Economy ETF 0.10%
  • Walmart Inc 0.90%
  • Energy Select Sector SPDR® Fund 3.30%
  • Weighted yield (per year) 0.59%

The portfolio's overall dividend yield is relatively low at 0.59%, with the highest contribution from the Energy Select Sector SPDR® Fund. Dividends can provide a steady income stream and cushion against market volatility. If increasing income is a goal, consider reallocating towards higher-yielding assets. However, it's crucial to balance income generation with growth potential, ensuring that dividend-focused investments align with long-term objectives and risk tolerance.

Ongoing product costs Info

  • Schwab U.S. Broad Market ETF 0.03%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Xtrackers S&P 500 ESG ETF 0.10%
  • Schwab Strategic Trust - Schwab Crypto Economy ETF 0.30%
  • SCHWAB TARGET 2050 INDEX FUND INSTITUTIONAL SHARES 0.08%
  • Energy Select Sector SPDR® Fund 0.09%
  • Weighted costs total (per year) 0.04%

The portfolio's costs are impressively low, with a total expense ratio (TER) of 0.04%. This cost efficiency supports better long-term performance by minimizing the drag on returns. Low-cost investments like ETFs and index funds are a smart choice for maintaining cost discipline. Continue to monitor and compare costs across similar funds periodically, ensuring the portfolio remains cost-effective while meeting investment goals. This proactive approach will help maximize net returns over time.

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