A Moderately Diversified Growth-Focused Portfolio with High Exposure to North America and a Strong Historic Performance

Report created on Jul 13, 2024

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

Positions

The portfolio is heavily weighted towards the Vanguard S&P 500 ETF, making up 60% of the total. It also includes a mix of common stocks and other ETFs, with smaller allocations to Realty Income Corp, Ford Motor Company, Meta Platforms Inc., Schwab U.S. Small-Cap ETF, Schwab International Equity ETF, and SPDR® Portfolio S&P 500 High Dividend ETF. This composition indicates a focus on growth with a moderate level of diversification. It's important to understand the implications of such concentration in a single ETF, as it can affect the portfolio's overall risk and return profile.

Growth Info

Historically, the portfolio has performed well, with a compound annual growth rate (CAGR) of 14.12%. However, it has experienced significant volatility, evidenced by a maximum drawdown of -36.54%. This illustrates the portfolio's potential for high returns, but also highlights the risks associated with its growth-focused strategy. It's crucial to weigh these factors when considering future investment decisions, as past performance is not always indicative of future results. Maintaining a balance between risk and reward is key to achieving long-term financial goals.

Projection Info

A Monte Carlo simulation, which uses random sampling to predict potential future outcomes, was conducted with 1,000 simulations. The results show a wide range of possible returns, with a 50th percentile end portfolio value of 280.84% and an annualized return of 13.63%. While 899 simulations resulted in positive returns, it's essential to remain cautious, as the 5th percentile showed a potential loss of -31.78%. This underscores the importance of having a risk management strategy in place and being prepared for various market conditions.

Asset classes Info

  • Stocks
    100%

The portfolio is almost entirely invested in stocks, with a minimal allocation to cash, bonds, and other asset classes. This heavy reliance on equities aligns with the growth-focused strategy but also increases the portfolio's risk exposure. Diversifying into other asset classes, such as bonds or cash equivalents, could help mitigate risk and provide more stability during market downturns. It's essential to periodically review the asset allocation to ensure it aligns with the investor's risk tolerance and financial objectives.

Sectors Info

  • Technology
    21%
  • Consumer Discretionary
    14%
  • Real Estate
    13%
  • Telecommunications
    12%
  • Financials
    11%
  • Health Care
    9%
  • Industrials
    7%
  • Consumer Staples
    5%
  • Utilities
    3%
  • Energy
    3%
  • Basic Materials
    2%

The sector allocation is fairly diverse, with technology, consumer cyclicals, and real estate being the top three sectors. This diversification across sectors helps spread risk and capture opportunities in different parts of the economy. However, it's important to monitor sector performance and adjust allocations as needed to maintain a balanced portfolio. Being overexposed to certain sectors can increase vulnerability to sector-specific downturns, so regular reviews and adjustments are crucial for long-term success.

Regions Info

  • North America
    94%
  • Europe Developed
    4%
  • Japan
    1%

The portfolio's geographic composition is heavily skewed towards North America, with 94.15% of assets allocated there. This concentration exposes the portfolio to regional risks and limits the potential benefits of international diversification. Expanding exposure to other regions, such as Europe or Asia, could enhance diversification and provide access to growth opportunities in different markets. It's important to balance regional exposure to reduce risk and take advantage of global investment opportunities.

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 is moderately diversified, but there is room for optimization. To achieve a riskier portfolio, consider increasing exposure to equities or high-growth sectors. For a more conservative approach, allocate more to bonds or cash equivalents. Moving along the efficient frontier can help balance risk and return, but focus on aligning the portfolio with your financial goals and risk tolerance first. Regularly reviewing and adjusting the portfolio's composition is key to maintaining an optimal balance and achieving long-term success.

Dividends Info

  • Ford Motor Company 5.60%
  • Meta Platforms Inc. 0.30%
  • Realty Income Corp 5.40%
  • Schwab U.S. Small-Cap ETF 2.00%
  • Schwab International Equity ETF 2.80%
  • SPDR® Portfolio S&P 500 High Dividend ETF 4.00%
  • Vanguard S&P 500 ETF 1.20%
  • Weighted yield (per year) 2.14%

The portfolio has a total dividend yield of 2.14%, with contributions from various positions like Realty Income Corp and SPDR® Portfolio S&P 500 High Dividend ETF. Dividends can provide a steady income stream and contribute to total returns. However, the yield is relatively modest, reflecting the growth-oriented nature of the portfolio. Investors seeking higher income may consider increasing exposure to dividend-paying stocks or funds, while maintaining a focus on growth to achieve their financial goals.

Ongoing product costs Info

  • Schwab U.S. Small-Cap ETF 0.04%
  • Schwab International Equity ETF 0.06%
  • SPDR® Portfolio S&P 500 High Dividend ETF 0.07%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.03%

The portfolio's costs are quite low, with a total expense ratio (TER) of 0.03%. This is a positive aspect, as keeping costs low is crucial for maximizing returns over time. The low-cost structure is primarily due to the inclusion of ETFs with minimal expense ratios, such as the Vanguard S&P 500 ETF. It's important to continue monitoring costs and seeking opportunities to minimize fees, as even small differences in expense ratios can have a significant impact on long-term performance.

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