A balanced portfolio with high U.S. equity exposure and limited international diversification

Report created on Dec 12, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

1/5
Single-Focused
Less diversification More diversification

Positions

This portfolio is a mix of ETFs and a single common stock, heavily weighted towards U.S. equities. Approximately 90% is invested in stocks, with a small allocation to cash and bonds. The Schwab U.S. Dividend Equity ETF and Vanguard Total Stock Market Index Fund ETF each make up 30% of the portfolio, indicating a focus on broad market exposure and dividend income. The remaining assets include large-cap growth stocks and a small position in Palantir Technologies. A minor allocation to short-term Treasury bonds provides some stability. This composition suggests a balanced approach, aiming for growth with some income, but with limited exposure to bonds and alternative asset classes.

Growth Info

Historically, this portfolio has shown strong performance, with a compound annual growth rate (CAGR) of 20.85%. However, it also experienced a significant maximum drawdown of -29.45%, indicating potential volatility. A hypothetical initial investment would have grown substantially over time, but with notable periods of decline. This highlights the importance of understanding market cycles and the potential for both gains and losses. While past performance can offer insights, it's not a guarantee of future results, and investors should consider their risk tolerance when evaluating such historical data.

Projection Info

Forward projections using Monte Carlo simulations suggest a wide range of potential outcomes. With 1,000 simulations, the portfolio shows a median potential growth of 1,503% and a high probability of positive returns. Monte Carlo analysis uses historical data to model different scenarios, helping investors understand potential risks and rewards. However, it's important to remember that these projections are based on past performance and market conditions, which may not reflect future realities. Investors should use these insights to prepare for various possibilities and align their expectations with their investment goals.

Asset classes Info

  • Stocks
    90%
  • Cash
    10%

The portfolio's allocation is heavily skewed towards stocks, with nearly 90% in equities, a small portion in cash, and almost negligible exposure to bonds. This concentration in equities suggests a focus on capital appreciation, but it may also increase risk due to market volatility. Diversifying across more asset classes could enhance stability and reduce risk. Consider increasing exposure to bonds or alternative investments to balance risk and return. This adjustment could provide more consistent performance and a buffer against stock market fluctuations.

Sectors Info

  • Technology
    32%
  • Financials
    11%
  • Health Care
    10%
  • Consumer Discretionary
    9%
  • Industrials
    7%
  • Telecommunications
    6%
  • Consumer Staples
    6%
  • Energy
    5%
  • Basic Materials
    1%
  • Real Estate
    1%
  • Utilities
    1%

The portfolio's sectoral allocation is concentrated, with a significant 32% in technology, followed by financial services and healthcare. This concentration in technology suggests a potential for high growth but also increased volatility. While exposure to various sectors provides some diversification, the heavy weighting in tech could pose risks if the sector underperforms. Balancing the portfolio with more defensive sectors, such as consumer staples or utilities, could help mitigate risk and provide stability. Diversifying across sectors can protect against downturns in any single industry.

Regions Info

  • North America
    90%

Geographically, the portfolio is overwhelmingly focused on North America, with 89.6% of assets allocated there. This limited international exposure may restrict diversification benefits and increase vulnerability to U.S. market fluctuations. Expanding geographic allocation to include more developed and emerging markets could enhance diversification and reduce risk. By tapping into global growth opportunities, the portfolio can potentially achieve a more balanced risk-return profile. This adjustment can help mitigate the impact of regional economic downturns and currency fluctuations.

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, which seeks the best possible risk-return ratio by adjusting asset allocations. While the current composition focuses on growth, there may be opportunities to enhance efficiency by reallocating between existing assets. This process identifies the most efficient portfolio for a given level of risk, potentially improving returns without increasing risk. However, optimization is based solely on the current assets and does not consider diversification into new asset classes. Regular rebalancing and analysis can help maintain optimal performance.

Dividends Info

  • Schwab U.S. Dividend Equity ETF 2.60%
  • Schwab U.S. Large-Cap Growth ETF 0.30%
  • iShares® 0-3 Month Treasury Bond ETF 5.20%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Weighted yield (per year) 1.72%

The portfolio offers an overall dividend yield of 1.72%, primarily driven by the Schwab U.S. Dividend Equity ETF. This yield provides a modest income stream, supplementing capital appreciation. Dividend-paying stocks can offer stability and reduce reliance on market gains for returns. However, the yield is somewhat limited due to the focus on growth-oriented assets like the Schwab U.S. Large-Cap Growth ETF and Palantir Technologies. Increasing allocation to higher-yielding assets could enhance income. This strategy provides cash flow that can be reinvested or used for other financial needs.

Ongoing product costs Info

  • Schwab U.S. Dividend Equity ETF 0.06%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • iShares® 0-3 Month Treasury Bond ETF 0.07%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.04%

The portfolio's total expense ratio is low at 0.04%, indicating cost-effective management. Low costs are crucial for maximizing long-term returns, as high fees can erode gains over time. The ETFs in this portfolio are competitively priced, allowing more of the investment to work towards growth. While the current cost structure is efficient, it's important to regularly review fees and explore options for further reduction. Staying vigilant about costs and seeking low-expense alternatives can significantly impact overall portfolio performance and investor returns.

What next?

Ready to invest in this portfolio?

Select a broker that fits your needs and watch for low fees to maximize your returns.

Select broker

Create your own report?

Analyze your portfolio

Join our community!

Join Discord

The information provided on this platform is for informational purposes only and should not be considered as financial or investment advice. Insightfolio does not provide investment advice, personalized recommendations, or guidance regarding the purchase, holding, or sale of financial assets. The tools and content are intended for educational purposes only and are not tailored to individual circumstances, financial needs, or objectives.

Insightfolio assumes no liability for the accuracy, completeness, or reliability of the information presented. Users are solely responsible for verifying the information and making independent decisions based on their own research and careful consideration. Use of the platform should not replace consultation with qualified financial professionals.

Investments involve risks. Users should be aware that the value of investments may fluctuate and that past performance is not an indicator of future results. Investment decisions should be based on personal financial goals, risk tolerance, and independent evaluation of relevant information.

Insightfolio does not endorse or guarantee the suitability of any particular financial product, security, or strategy. Any projections, forecasts, or hypothetical scenarios presented on the platform are for illustrative purposes only and are not guarantees of future outcomes.

By accessing the services, information, or content offered by Insightfolio, users acknowledge and agree to these terms of the disclaimer. If you do not agree to these terms, please do not use our platform.

Instrument logos provided by Elbstream.

Help us improve Insightfolio

Your feedback makes a difference! Share your thoughts in our quick survey. Take the survey