Balanced portfolio with strong US exposure and a focus on growth-oriented sectors

Report created on Jul 2, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio is composed of a mix of ETFs, primarily focused on US stocks, with a significant portion in the Vanguard Total Stock Market Index Fund ETF Shares (31%) and the Invesco NASDAQ 100 ETF (26%). This composition suggests a growth-oriented strategy with a focus on large-cap stocks. The inclusion of international stocks, bonds, and commodities adds diversification. Compared to a typical balanced portfolio, it leans more towards equities, indicating a higher risk tolerance. Consider reviewing the balance between asset classes to ensure alignment with your risk tolerance and investment goals.

Growth Info

Historically, the portfolio has delivered a strong Compound Annual Growth Rate (CAGR) of 11.05%, which is impressive compared to typical balanced portfolios. However, the maximum drawdown of -27.07% indicates potential vulnerability during market downturns. This performance suggests a portfolio that has capitalized on bull markets but may face challenges in volatile periods. It's essential to ensure that your risk tolerance aligns with these historical drawdowns to avoid discomfort during market corrections.

Projection Info

The Monte Carlo simulation, a method that uses historical data to project future outcomes, suggests a median potential growth of 134.16% over a specified period. However, there's a wide range of outcomes, with a 5th percentile showing a potential loss of -53.74%. While 814 out of 1,000 simulations resulted in positive returns, it's crucial to remember that past data doesn't guarantee future results. Regularly reviewing your portfolio's alignment with your financial goals and risk tolerance can help mitigate potential adverse outcomes.

Asset classes Info

  • Stocks
    82%
  • Bonds
    14%
  • Other
    3%
  • Cash
    1%

The portfolio is heavily weighted towards stocks, accounting for approximately 82% of the total allocation. Bonds make up about 14%, while other asset classes, including commodities, represent a small portion. This equity-heavy allocation is typical for a growth-focused strategy but may expose the portfolio to higher volatility. Diversifying further into bonds or other asset classes could enhance stability, especially during market downturns. Balancing growth potential with risk mitigation is key to achieving long-term investment success.

Sectors Info

  • Technology
    26%
  • Consumer Discretionary
    10%
  • Financials
    9%
  • Basic Materials
    8%
  • Telecommunications
    8%
  • Industrials
    7%
  • Health Care
    6%
  • Consumer Staples
    4%
  • Energy
    2%
  • Real Estate
    2%
  • Utilities
    2%

The portfolio's sector allocation shows a significant concentration in technology (25.87%), followed by consumer cyclicals and financial services. This tech-heavy focus aligns with recent market trends but can lead to increased volatility, particularly if interest rates rise. The exposure to diverse sectors like healthcare and industrials provides some balance, yet further diversification could be beneficial. Consider evaluating sector weights regularly to ensure they align with your market outlook and risk profile, potentially adjusting as economic conditions change.

Regions Info

  • North America
    67%
  • Europe Developed
    6%
  • Asia Emerging
    3%
  • Japan
    2%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    1%

With 66.58% of assets allocated to North America, the portfolio has a strong domestic focus, which can be beneficial given the region's robust market performance. However, this concentration may limit exposure to growth opportunities in emerging markets. The portfolio includes modest allocations to Europe and Asia, which can provide some geographic diversification. Expanding exposure to underrepresented regions could enhance growth potential and reduce risk associated with over-reliance on any single geographic area.

Redundant positions Info

  • VanEck Gold Miners ETF
    VanEck Junior Gold Miners ETF
    High correlation

The portfolio contains highly correlated assets, particularly between the VanEck Gold Miners ETF and VanEck Junior Gold Miners ETF. High correlation means these assets tend to move together, which can limit diversification benefits. Reducing overlap by selecting less correlated alternatives could enhance diversification and risk management. It's important to regularly assess the correlation of portfolio holdings to ensure they contribute to overall stability and are aligned with your investment strategy.

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 potentially be optimized using the Efficient Frontier, a concept that helps identify the best possible risk-return ratio based on current assets. This involves adjusting allocations to achieve maximum returns for a given level of risk. However, this optimization focuses solely on the existing assets and their allocation, not on diversification or other goals. Regularly assessing whether your portfolio is operating efficiently can help ensure that it aligns with your risk tolerance and investment objectives.

Dividends Info

  • Vanguard Total Bond Market Index Fund ETF Shares 3.70%
  • VanEck Junior Gold Miners ETF 2.40%
  • Invesco NASDAQ 100 ETF 0.60%
  • Vanguard Small-Cap Value Index Fund ETF Shares 1.40%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Vanguard Total International Stock Index Fund ETF Shares 3.40%
  • Weighted yield (per year) 1.68%

The portfolio's overall dividend yield is 1.68%, with the Vanguard Total Bond Market Index Fund ETF Shares contributing the highest yield at 3.7%. While dividends can provide a steady income stream, the current yield is relatively modest. For investors seeking income, exploring higher-yielding assets or dividend-focused strategies might be worthwhile. However, it's crucial to balance yield with growth potential and risk, as higher yields often come with increased volatility.

Ongoing product costs Info

  • Vanguard Total Bond Market Index Fund ETF Shares 0.03%
  • VanEck Gold Miners ETF 0.51%
  • VanEck Junior Gold Miners ETF 0.52%
  • Invesco NASDAQ 100 ETF 0.15%
  • iShares Silver Trust 0.50%
  • Vanguard Small-Cap Value Index Fund ETF Shares 0.07%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.11%

The portfolio's total expense ratio (TER) is 0.11%, which is commendably low and supports better long-term returns by minimizing costs. Vanguard's funds, known for their cost-effectiveness, contribute significantly to this low TER. Keeping costs in check is crucial for maximizing returns, as high fees can erode gains over time. Regularly reviewing and comparing fund expenses can help ensure that the portfolio remains cost-efficient, potentially exploring even lower-cost options if available.

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