Balanced portfolio with moderate risk and a focus on U.S. large-cap equities

Report created on Feb 16, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio is composed primarily of U.S. large-cap growth equities, with a significant allocation to a total market index fund. A notable portion is also dedicated to dividend-paying equities and a money market fund. This structure provides a blend of growth and income, aligning with a balanced investment profile. The portfolio's composition leans heavily towards equities, which may offer higher potential returns but also comes with increased volatility compared to more diversified portfolios.

Growth Info

Historically, the portfolio has delivered a strong CAGR of 11.85%, which is impressive. However, it has experienced a significant maximum drawdown of -30.93%. This indicates that while the portfolio can generate substantial returns, it is also susceptible to considerable fluctuations during market downturns. Comparing this to a benchmark can provide additional context, but the strong historical performance suggests a well-managed risk-return balance, albeit with room for improvement during volatile periods.

Projection Info

The Monte Carlo simulation, which uses historical data to project future outcomes, shows promising results. With 967 out of 1,000 simulations yielding positive returns, the portfolio's median projection is a 260.2% increase. However, it's essential to remember that these projections are not guarantees, as they rely on past performance. This forward-looking analysis suggests a high likelihood of achieving positive outcomes, but investors should remain cautious of the inherent uncertainties in market conditions.

Asset classes Info

  • Stocks
    83%
  • No data
    17%

The portfolio is heavily weighted towards stocks, comprising 83% of the total allocation. This concentration in equities can drive growth but may also introduce volatility. The lack of exposure to other asset classes, such as bonds or alternatives, might limit diversification benefits. While the current allocation aligns with a growth-oriented strategy, investors may want to consider diversifying into other asset classes to mitigate risk and enhance stability, especially during market downturns.

Sectors Info

  • Technology
    23%
  • No data
    17%
  • Financials
    10%
  • Health Care
    9%
  • Real Estate
    8%
  • Telecommunications
    7%
  • Consumer Discretionary
    6%
  • Industrials
    6%
  • Consumer Staples
    5%
  • Energy
    4%
  • Consumer Discretionary
    3%
  • Basic Materials
    1%
  • Utilities
    1%

The portfolio shows a strong tilt towards technology, representing 23% of the allocation. This sector concentration can lead to higher returns when tech stocks perform well but may increase volatility, especially during interest rate hikes. The inclusion of other sectors like financial services and healthcare provides some balance, yet the portfolio could benefit from further diversification across sectors to reduce risk and capture opportunities in varying economic conditions.

Regions Info

  • North America
    83%
  • No data
    17%

Geographically, the portfolio is heavily concentrated in North America, with 83% exposure. This focus on the U.S. market can benefit from the stability and growth of the region but may miss out on opportunities in other global markets. The lack of exposure to developed and emerging markets outside North America limits diversification. Investors might consider increasing international exposure to reduce geographic risk and potentially enhance returns through global diversification.

Market capitalization Info

  • Large-cap
    34%
  • Mega-cap
    29%
  • No data
    17%
  • Mid-cap
    15%
  • Small-cap
    3%
  • Micro-cap
    1%

The portfolio's market capitalization exposure is predominantly in large and mega-cap stocks, accounting for 63% of the allocation. This focus on larger companies can provide stability and consistent growth. However, the limited exposure to small and mid-cap stocks may restrict the potential for higher returns that these segments can offer. Balancing the portfolio with a broader range of market capitalizations could enhance diversification and capture growth across different company sizes.

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 can potentially be optimized using the Efficient Frontier, which helps identify the best risk-return ratio based on current assets. This involves adjusting the allocation among existing holdings to achieve the most efficient balance. While diversification and other goals are important, focusing on optimizing the risk-return ratio can enhance performance. Investors should periodically review the portfolio's allocation to ensure it remains aligned with their risk tolerance and investment objectives.

Dividends Info

  • Fidelity Total Market Index Fund 0.20%
  • Realty Income Corp 5.80%
  • Schwab U.S. Dividend Equity ETF 3.60%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Fidelity® Government Money Market Fund 4.40%
  • Weighted yield (per year) 2.11%

The portfolio's overall dividend yield stands at 2.11%, with significant contributions from the Schwab U.S. Dividend Equity ETF and Realty Income Corp. Dividends can provide a steady income stream, appealing to investors seeking regular cash flow. However, the portfolio is growth-oriented, so the dividend yield is relatively moderate. Investors might consider maintaining or slightly increasing dividend-focused investments to enhance income potential while balancing growth objectives.

Ongoing product costs Info

  • Fidelity Total Market Index Fund 0.02%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Weighted costs total (per year) 0.03%

The portfolio's total expense ratio (TER) is impressively low at 0.03%, supporting better long-term performance by minimizing costs. This efficient cost structure aligns well with best practices, ensuring that more of the portfolio's returns are retained by the investor. Keeping costs low is crucial for maximizing net returns over time, and the current TER is commendable. Investors should continue monitoring expenses to maintain this advantage and explore opportunities to further reduce costs if possible.

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