Balanced portfolio with strong financial sector focus and limited geographic diversification

Report created on Apr 8, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

The portfolio is evenly distributed among 12 positions, with a distinct tilt towards financial services, represented by three major banks. ETFs make up a significant portion, providing broad market exposure. Compared to typical benchmarks, this composition is less diversified, increasing specific sector risk. A more diversified approach across different sectors and asset classes could mitigate concentrated risks and enhance stability.

Growth Info

Historically, the portfolio has shown a robust CAGR of 14.15%, outperforming many traditional benchmarks. However, the maximum drawdown of -23.91% highlights potential volatility. Understanding these metrics is crucial as they demonstrate both growth potential and risks. To enhance performance consistency, consider strategies that reduce drawdown, such as increasing defensive assets or diversifying further.

Projection Info

The Monte Carlo simulation, which uses historical data to predict future outcomes, indicates a median growth of 426.5% over the investment horizon. While this suggests strong potential, remember that simulations are not guarantees. They provide a range of possibilities, emphasizing the importance of maintaining a flexible strategy that can adapt to varying market conditions.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted in stocks, with no allocation to cash or other asset classes. This singular focus can lead to higher volatility, especially during market downturns. Diversification into bonds or alternative assets might offer stability and reduce risk. Balancing asset classes can help achieve a more resilient portfolio, aligning with broader market norms.

Sectors Info

  • Financials
    38%
  • Technology
    16%
  • Consumer Staples
    15%
  • Industrials
    9%
  • Health Care
    6%
  • Consumer Discretionary
    6%
  • Telecommunications
    5%
  • Energy
    3%
  • Utilities
    1%
  • Basic Materials
    1%
  • Real Estate
    1%

Financial services dominate the sector allocation at 38%, followed by technology and consumer defensive sectors. This concentration may lead to increased volatility, particularly during financial market stress. Balancing with sectors like healthcare or utilities could provide more stability and align closer to standard benchmarks, reducing sector-specific risks.

Regions Info

  • North America
    98%
  • Europe Developed
    1%

With 98% exposure to North America, the portfolio lacks geographic diversification, heightening vulnerability to regional economic shifts. While U.S. markets have performed well, adding international exposure could mitigate this risk. Exploring developed and emerging markets can provide growth opportunities and reduce reliance on a single region.

Market capitalization Info

  • Large-cap
    50%
  • Mega-cap
    32%
  • Mid-cap
    16%
  • Small-cap
    2%

The portfolio is skewed towards large-cap stocks, with 82% in big and mega caps. This focus can provide stability but may limit growth potential found in smaller companies. Introducing more mid and small-cap stocks could enhance diversification and offer higher growth opportunities, balancing the risk-return profile.

Redundant positions Info

  • Vanguard Total Stock Market Index Fund ETF Shares
    Vanguard Total World Stock Index Fund ETF Shares
    Vanguard Mega Cap Index Fund ETF Shares
    SPDR® Portfolio S&P 500 ETF
    Invesco NASDAQ 100 ETF
    High correlation
  • Schwab U.S. Dividend Equity ETF
    Vanguard High Dividend Yield Index Fund ETF Shares
    High correlation

The portfolio contains highly correlated assets, particularly among ETFs tracking similar indices. This limits diversification benefits, as correlated assets tend to move together. Reducing overlap by selecting ETFs with distinct strategies or adding uncorrelated assets can improve risk management and optimize the portfolio's performance.

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, focusing on the best risk-return ratio. By adjusting allocations among current assets, the portfolio can achieve a more efficient balance. This optimization doesn't guarantee diversification but enhances the potential for higher returns relative to risk.

Dividends Info

  • Goldman Sachs Group Inc 2.50%
  • JPMorgan Chase & Co 1.70%
  • Vanguard Mega Cap Index Fund ETF Shares 0.70%
  • Morgan Stanley 3.60%
  • Invesco NASDAQ 100 ETF 0.70%
  • Schwab U.S. Dividend Equity ETF 4.20%
  • SPDR® Portfolio S&P 500 ETF 1.50%
  • Vanguard Total World Stock Index Fund ETF Shares 2.20%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.50%
  • Vanguard High Dividend Yield Index Fund ETF Shares 3.20%
  • Industrial Select Sector SPDR® Fund 1.30%
  • Consumer Staples Select Sector SPDR® Fund 2.60%
  • Weighted yield (per year) 2.28%

The portfolio's overall dividend yield is 2.28%, with contributions from both individual stocks and dividend-focused ETFs. Dividends provide a steady income stream, appealing to investors seeking regular returns. To enhance yield, consider increasing allocation to high-dividend sectors or funds, while ensuring alignment with overall investment goals.

Ongoing product costs Info

  • Vanguard Mega Cap Index Fund ETF Shares 0.07%
  • Invesco NASDAQ 100 ETF 0.15%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • SPDR® Portfolio S&P 500 ETF 0.02%
  • Vanguard Total World Stock Index Fund ETF Shares 0.07%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard High Dividend Yield Index Fund ETF Shares 0.06%
  • Industrial Select Sector SPDR® Fund 0.09%
  • Consumer Staples Select Sector SPDR® Fund 0.09%
  • Weighted costs total (per year) 0.05%

The portfolio's total expense ratio (TER) is impressively low at 0.05%, supporting better long-term returns by minimizing costs. This competitive cost structure is a strong advantage, aligning with best practices for cost-efficient investing. Maintaining this low-cost approach will continue to benefit the portfolio's performance over time.

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