A balanced portfolio with strong tech exposure and moderate international diversification

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.

What type of investor this portfolio is suitable for

Balanced Investors

This portfolio suits an investor with moderate risk tolerance seeking balanced growth and income. With a long-term horizon, it offers exposure to U.S. and international equities, providing potential for capital appreciation and income through dividends. The portfolio's focus on large-cap stocks and tech sectors aligns with those looking for stability and growth. It's ideal for individuals aiming to build wealth steadily while accepting some market volatility.

Positions

  • Vanguard S&P 500 ETF
    VOO - US9229083632
    50.00%
  • Invesco NASDAQ 100 ETF
    QQQM - US46138G6492
    25.00%
  • Vanguard Total International Stock Index Fund ETF Shares
    VXUS - US9219097683
    25.00%

This portfolio is composed of three major ETFs: Vanguard S&P 500 ETF (50%), Invesco NASDAQ 100 ETF (25%), and Vanguard Total International Stock Index Fund ETF Shares (25%). The heavy focus on U.S.-based ETFs, especially the S&P 500 and NASDAQ 100, indicates a strong reliance on the American market. This setup aligns well with a balanced risk profile, offering both growth potential and stability. The allocation is well-diversified across major indices, which helps in spreading risk while capitalizing on the performance of leading companies. However, the portfolio could benefit from a slight increase in non-U.S. exposure to further enhance diversification.

Growth Info

Historically, the portfolio has shown robust performance, boasting a Compound Annual Growth Rate (CAGR) of 11.10%. This suggests a healthy growth trajectory, particularly when benchmarked against typical market returns. The maximum drawdown of -27.74% indicates the worst peak-to-trough decline, reflecting the portfolio's vulnerability during market downturns. Despite this, the portfolio's ability to recover and sustain an upward trend is commendable. To manage such drawdowns better, consider incorporating more defensive assets or diversifying further geographically.

Projection Info

Forward projections using Monte Carlo simulations, which use historical data to predict future outcomes, show an annualized return of 11.43%. With 1,000 simulations, the portfolio had a 95.8% chance of positive returns, indicating a favorable outlook. However, it's crucial to remember that such projections are not guarantees. They provide a probabilistic view, showing a range of outcomes, with the 5th percentile at 7.3% and the 67th at 405.5%. To prepare for potential volatility, consider strategies like rebalancing or hedging.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%
  • Other
    0%
  • No data
    0%

The portfolio is heavily weighted in stocks, accounting for 99% of the allocation, with a minimal 1% in cash. This stock-centric approach aligns with a growth-focused strategy, leveraging equity markets for returns. While this can yield high returns, it also exposes the portfolio to market volatility. Including a small portion of bonds or other fixed-income assets could provide a buffer during market downturns, offering stability and reducing overall risk.

Sectors Info

  • Technology
    31%
  • Financials
    13%
  • Consumer Discretionary
    11%
  • Telecommunications
    10%
  • Health Care
    9%
  • Industrials
    9%
  • Consumer Staples
    6%
  • Energy
    3%
  • Basic Materials
    3%
  • Utilities
    3%
  • Real Estate
    2%

Sector-wise, the portfolio has a notable concentration in technology (31%), followed by financial services (13%) and consumer cyclicals (11%). This tech-heavy focus can drive growth, especially in bull markets, but may also lead to increased volatility, particularly during tech sector corrections. A more balanced sector allocation could mitigate this risk, potentially enhancing stability. Consider adjusting sector weights to align more closely with broader market indices, reducing overexposure to any single sector.

Regions Info

  • North America
    76%
  • Europe Developed
    10%
  • Asia Emerging
    4%
  • Japan
    4%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    1%
  • Europe Emerging
    0%

Geographically, the portfolio is predominantly North American (76%), with limited exposure to Europe (10%) and Asia (8%). This strong U.S. focus can capitalize on the American market's historical strength but may miss out on growth opportunities in other regions. Increasing exposure to emerging markets or other developed regions could enhance diversification and provide a hedge against U.S.-specific risks. Balancing geographic allocation can help mitigate regional economic downturns.

Market capitalization Info

  • Mega-cap
    48%
  • Large-cap
    33%
  • Mid-cap
    16%
  • Small-cap
    1%
  • Micro-cap
    0%

The portfolio's market capitalization is skewed towards mega-cap stocks (48%) and big-cap stocks (33%), with minimal exposure to small-cap companies (1%). While large-cap stocks offer stability and steady growth, small-cap stocks can provide higher growth potential, albeit with increased risk. Introducing a modest allocation to small or mid-cap stocks could boost potential returns and enhance diversification. This adjustment would align the portfolio with a broader range of market opportunities.

Dividends Info

  • Invesco NASDAQ 100 ETF 0.70%
  • Vanguard S&P 500 ETF 1.40%
  • Vanguard Total International Stock Index Fund ETF Shares 3.10%
  • Weighted yield (per year) 1.65%

The portfolio's dividend yield stands at 1.65%, primarily driven by the Vanguard Total International Stock Index Fund ETF Shares, which offers a 3.10% yield. Dividends can provide a steady income stream, enhancing total returns and offering some downside protection. For investors prioritizing income, increasing allocations to high-dividend-yielding assets could be beneficial. However, for those focused on growth, the current yield is adequate, balancing income and capital appreciation.

Ongoing product costs Info

  • Invesco NASDAQ 100 ETF 0.15%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.05%
  • Weighted costs total (per year) 0.06%

The portfolio's total expense ratio (TER) is impressively low at 0.06%, with the Vanguard S&P 500 ETF contributing significantly to this efficiency. Low costs are crucial for maximizing long-term returns, as they minimize the drag on performance. This cost structure aligns well with best practices, ensuring more of your money is working for you. Maintaining this low-cost approach is advisable, as it supports better compounding over time, enhancing overall portfolio growth.

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.

The portfolio's current asset allocation can be optimized using the Efficient Frontier concept, which seeks the best possible risk-return ratio. This involves adjusting the weights of existing assets to maximize returns for a given level of risk. While the portfolio is well-structured, slight adjustments in asset weights could improve efficiency. It's important to note that this optimization focuses on risk-return balance rather than diversification, so maintaining a diversified approach remains essential.

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