Balanced Portfolio with High Risk Score and Diversification, Strong Historical Performance and Positive Future Projections

Report created on Nov 24, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio consists of two ETFs: iShares Core Equity Portfolio and Vanguard S&P 500 Index ETF, making up 65% and 35% respectively. This allocation suggests a strong focus on equities, which can offer growth but also introduces more volatility. A balanced profile with moderate diversification allows for exposure to different sectors and geographies, but the heavy equity weighting might not suit everyone. To enhance the portfolio, consider reviewing the overall equity exposure and possibly incorporating more fixed-income assets to balance risk and return.

Growth Info

Historically, the portfolio has performed well with a CAGR of 15.04%, indicating solid growth over time. However, it has also experienced a max drawdown of -28.91%, highlighting the potential for significant losses during market downturns. This performance suggests a portfolio that can deliver strong returns but with notable risk. To manage potential losses, it might be wise to consider strategies such as diversifying further or implementing stop-loss measures to protect gains.

Projection Info

Using a Monte Carlo simulation, which involves running thousands of random scenarios to forecast potential outcomes, the portfolio shows promising future projections. With a hypothetical initial investment, the annualized return across all simulations is 16.79%, and 999 out of 1,000 simulations show positive returns. This suggests a high likelihood of continued growth. However, it's essential to remember that past performance and simulations don't guarantee future results. Regularly reviewing and adjusting the portfolio can help maintain alignment with investment goals.

Asset classes Info

  • US Equity
    65%
  • Stocks
    16%

The portfolio primarily consists of US Equity at 65.14% and general Equity at 16.36%, with minimal allocation to Cash and Other assets. This heavy focus on equities can drive growth but also increases exposure to market volatility. Understanding the implications of such a concentration is crucial, as it could lead to significant fluctuations in portfolio value. To mitigate this, consider diversifying into other asset classes like bonds or real estate, which can provide stability and income.

Sectors Info

  • Technology
    25%
  • Financials
    18%
  • Industrials
    10%
  • Consumer Discretionary
    10%
  • Health Care
    9%
  • Telecommunications
    7%
  • Energy
    6%
  • Consumer Staples
    5%
  • Basic Materials
    4%
  • Utilities
    3%
  • Real Estate
    3%

With exposure to 11 sectors, the portfolio is moderately diversified, focusing heavily on Technology (24.94%), Financial Services (17.77%), and Industrials (10.36%). While sector diversity can reduce risk, the heavy concentration in a few sectors might lead to higher volatility if those sectors underperform. Balancing the sector allocation by increasing exposure to underrepresented sectors could enhance stability. It's important to regularly review sector performance and adjust allocations to align with market trends and personal risk tolerance.

Regions Info

  • North America
    82%
  • Europe Developed
    9%
  • Japan
    4%
  • Asia Emerging
    2%
  • Asia Developed
    1%
  • Australasia
    1%

Geographically, the portfolio is heavily weighted towards North America at 81.89%, with smaller allocations to Europe Developed, Japan, and other regions. This concentration in North America might limit exposure to opportunities in other regions and increase vulnerability to regional economic downturns. Diversifying geographically can help capture growth in emerging markets and provide a hedge against regional risks. Consider exploring investment options that offer broader geographic exposure to enhance global diversification.

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 optimization chart suggests potential for improvement by adjusting along the efficient frontier. To achieve a riskier portfolio, consider increasing equity exposure or adding more volatile assets. For a more conservative approach, incorporating fixed-income securities or cash equivalents can help reduce risk. However, before making changes, it's crucial to align adjustments with personal risk tolerance and financial goals. Regularly reviewing the portfolio's performance and risk profile will ensure it remains optimized for long-term success.

Dividends Info

  • Vanguard S&P 500 Index ETF 1.00%
  • iShares Core Equity Portfolio 1.80%
  • Weighted yield (per year) 1.52%

The portfolio's dividend yield stands at 1.52%, with the Vanguard S&P 500 Index ETF yielding 1.0% and the iShares Core Equity Portfolio yielding 1.8%. While not the primary focus of this growth-oriented portfolio, dividends can provide a steady income stream and help cushion against market volatility. To enhance income potential, consider gradually increasing exposure to dividend-paying assets. This can create a more balanced approach, blending growth and income to meet long-term financial goals.

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