Balanced portfolio with a strong focus on emerging markets and diversified asset classes
Report created on Aug 7, 2025Risk profile
4/7
Diversification profile
4/5
Positions
-
SF SCHWAB FUNDAMENTAL EMERGING MARKETS LARGE COMPANY INDEX FUND INSTITUTIONAL SHARES
SFENX - US8085093438 58.00% -
SW SCHWAB TOTAL STOCK MARKET INDEX FUND SELECT SHARES
SWTSX - US8085097561 33.00% -
SC Schwab U.S. Dividend Equity ETF
SCHD - US8085247976 4.00% -
SW SCHWAB INTERNATIONAL INDEX FUND SELECT SHARES
SWISX - US8085098304 4.00% -
BB Banco Bilbao Viscaya Argentaria SA ADR
BBVA - US05946K1016 1.00%
This portfolio features a significant emphasis on emerging markets, with 58% allocated to a Schwab emerging markets fund, reflecting a strategic bet on the growth potential in these regions. The inclusion of a total stock market index fund and a U.S. dividend equity ETF, alongside a smaller allocation to international stocks and a single common stock position, suggests a balanced approach to diversification. However, the heavy weighting towards emerging markets, compared to more conservative allocations in developed markets and dividend-yielding assets, indicates a tilt towards higher growth potential at the expense of higher volatility.
Growth
Historically, this portfolio has shown a Compound Annual Growth Rate (CAGR) of 10.98%, with a maximum drawdown of -36.46%. These figures suggest that while the portfolio has experienced significant volatility, it has also provided substantial growth over time. The days contributing to 90% of the returns being concentrated in 29.0 days highlights the impact of extreme positive market movements on overall performance. This volatility is characteristic of the higher risk associated with emerging market investments but has been rewarded with strong growth.
Projection
A Monte Carlo simulation, which uses historical data to forecast future outcomes, suggests a wide range of potential returns for this portfolio, indicating both its growth potential and volatility. The simulation's 50th percentile outcome of a 274.2% return is promising, but the 5th percentile outcome of -9.5% underscores the risk of loss. These projections are useful for understanding potential future scenarios but should be taken with caution as they cannot guarantee future returns.
Asset classes
- Stocks 99%
- Cash 1%
The portfolio's allocation shows a heavy emphasis on stocks (99%), with a minimal cash position (1%). This asset class distribution supports the portfolio's growth objectives but also reflects a higher risk profile. The absence of bonds or other fixed-income securities means the portfolio may lack the stabilizing effect these assets can provide during market downturns. Considering rebalancing to include a broader mix of asset classes could enhance long-term risk-adjusted returns.
Sectors
- Financials 24%
- Technology 20%
- Consumer Discretionary 10%
- Energy 9%
- Telecommunications 8%
- Basic Materials 7%
- Industrials 7%
- Consumer Staples 5%
- Health Care 5%
- Utilities 2%
- Real Estate 2%
Sector allocation within this portfolio is broadly diversified, with significant exposures to financial services, technology, and consumer cyclicals. This diversification across sectors can help mitigate risks associated with specific industry downturns. However, the heavy concentration in financial services and technology sectors, which can be volatile, may contribute to the portfolio's overall risk profile. Balancing sector exposure to include more defensive sectors like healthcare or utilities could provide additional stability.
Regions
- North America 37%
- Asia Emerging 32%
- Asia Developed 11%
- Latin America 9%
- Africa/Middle East 5%
- Europe Developed 4%
- Europe Emerging 1%
- Japan 1%
The geographic distribution demonstrates a strong focus on emerging markets, particularly in Asia and Latin America, which aligns with the portfolio's growth orientation. North America represents the largest developed market exposure. This geographic spread enhances diversification and the potential for high returns but also introduces geopolitical and currency risks inherent in emerging markets. Increasing exposure to developed markets could help balance these risks.
Market capitalization
- Mega-cap 50%
- Large-cap 29%
- Mid-cap 14%
- Small-cap 3%
- Micro-cap 1%
The market capitalization breakdown shows a preference for mega and large-cap stocks, which tend to be more stable and less volatile than smaller companies. This is a prudent strategy for a portfolio with significant emerging market exposure, as larger companies often have more established business models and are better equipped to weather economic fluctuations. However, incorporating a broader mix of mid to small-cap stocks could offer higher growth opportunities, albeit with increased risk.
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.
Considering the Efficient Frontier, the portfolio appears to be positioned for a favorable risk-return trade-off given its current asset allocation. However, there's always room for optimization, especially to enhance diversification and reduce volatility without drastically sacrificing returns. Re-evaluating the asset mix and possibly incorporating additional asset classes or rebalancing sector and geographic exposures could move the portfolio closer to the optimal point on the Efficient Frontier.
Dividends
- Banco Bilbao Viscaya Argentaria SA ADR 4.30%
- Schwab U.S. Dividend Equity ETF 3.80%
- SCHWAB FUNDAMENTAL EMERGING MARKETS LARGE COMPANY INDEX FUND INSTITUTIONAL SHARES 4.00%
- SCHWAB INTERNATIONAL INDEX FUND SELECT SHARES 2.80%
- SCHWAB TOTAL STOCK MARKET INDEX FUND SELECT SHARES 1.10%
- Weighted yield (per year) 2.99%
Dividend yields across the portfolio contribute to its total return, with the Banco Bilbao Viscaya Argentaria SA ADR and the Schwab U.S. Dividend Equity ETF offering the highest yields. These dividends provide a steady income stream, which can be particularly beneficial during market volatility. The overall yield of 2.99% is respectable, combining growth potential with income generation. Considering additional high-dividend assets could further enhance income without significantly increasing risk.
Ongoing product costs
- Schwab U.S. Dividend Equity ETF 0.06%
- SCHWAB FUNDAMENTAL EMERGING MARKETS LARGE COMPANY INDEX FUND INSTITUTIONAL SHARES 0.39%
- SCHWAB INTERNATIONAL INDEX FUND SELECT SHARES 0.06%
- SCHWAB TOTAL STOCK MARKET INDEX FUND SELECT SHARES 0.03%
- Weighted costs total (per year) 0.24%
The portfolio's overall expense ratio of 0.24% is relatively low, which is advantageous for long-term growth as lower costs translate directly into higher net returns. Each fund within the portfolio contributes to this cost-efficiency, with the Schwab Total Stock Market Index Fund being particularly cost-effective. Maintaining a focus on low-cost investments is a sound strategy that can significantly impact investment outcomes over time.
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