A balanced portfolio with strong U.S. focus and significant exposure to Berkshire Hathaway

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 seeking balanced growth with moderate risk tolerance and a long-term horizon. It prioritizes steady returns while maintaining exposure to global equities, making it ideal for individuals looking to build wealth over time. The strong focus on U.S. equities aligns with investors comfortable with regional concentration but open to gradual diversification for stability.

Positions

  • Berkshire Hathaway Inc
    BRK-B - US0846707026
    40.00%
  • Vanguard S&P 500 ETF
    VOO - US9229083632
    40.00%
  • Vanguard Total International Stock Index Fund ETF Shares
    VXUS - US9219097683
    20.00%

The portfolio is composed of three main holdings: Berkshire Hathaway Inc. at 40%, Vanguard S&P 500 ETF at 40%, and Vanguard Total International Stock Index Fund ETF Shares at 20%. This structure leans heavily on U.S. equities, especially through Berkshire Hathaway and the S&P 500 ETF. While the allocation reflects a strong commitment to U.S. markets, it might benefit from a more varied asset mix for enhanced diversification. Consider introducing other asset classes, such as bonds or real estate, to balance the equity-heavy composition and potentially reduce volatility.

Growth Info

Historically, the portfolio has delivered a Compound Annual Growth Rate (CAGR) of 12.71%, which is impressive. However, it also experienced a maximum drawdown of -32.02%. This indicates that while the portfolio has grown well over time, it has also faced significant downturns. Comparing this to a benchmark, such as the S&P 500, can provide context for these figures. To mitigate future drawdowns, consider diversifying the portfolio further or incorporating assets with lower volatility.

Projection Info

The Monte Carlo simulation, a tool that uses historical data to project potential future outcomes, shows a median growth of 327.2% with a 5th percentile at 48.7%. This suggests a wide range of possible outcomes, highlighting both potential growth and risk. While simulations offer valuable insights, remember they are based on past data and assumptions. To prepare for various market conditions, ensure the portfolio is flexible and diversified enough to adapt to unexpected changes.

Asset classes Info

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

With 99% of the portfolio in stocks and 1% in cash, the allocation heavily favors equities. This can lead to higher returns but also increased risk. Compared to a balanced benchmark, which might include bonds or other asset classes, this portfolio is less diversified. Introducing fixed-income securities or alternative investments could provide stability and reduce overall risk, especially during market downturns.

Sectors Info

  • Financials
    50%
  • Technology
    15%
  • Consumer Discretionary
    7%
  • Industrials
    6%
  • Health Care
    6%
  • Telecommunications
    5%
  • Consumer Staples
    3%
  • Energy
    2%
  • Basic Materials
    2%
  • Utilities
    2%
  • Real Estate
    1%

The sector allocation is notably concentrated, with 50% in Financial Services, primarily due to Berkshire Hathaway, and 15% in Technology. While this concentration has benefited from recent trends, it could pose risks if these sectors underperform. Balancing exposure across more sectors could reduce volatility. Consider gradually reallocating to sectors like healthcare or consumer staples, which may offer more stability.

Regions Info

  • North America
    81%
  • Europe Developed
    8%
  • Asia Emerging
    3%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    0%
  • Europe Emerging
    0%

Geographically, the portfolio is heavily weighted towards North America, at 81%. While this aligns with the investor's U.S. base, it limits exposure to potentially high-growth markets elsewhere. Diversifying geographically can provide a hedge against regional economic downturns. Increasing allocations to emerging markets or other developed regions could enhance growth potential and reduce reliance on U.S. market performance.

Market capitalization Info

  • Mega-cap
    68%
  • Large-cap
    20%
  • Mid-cap
    11%
  • Small-cap
    1%
  • Micro-cap
    0%

The portfolio's market capitalization is predominantly in mega-cap stocks at 68%, with smaller allocations to big, medium, and small caps. This skew towards large companies offers stability but may limit growth opportunities found in smaller-cap stocks. Balancing this distribution by increasing exposure to mid and small-cap stocks could enhance potential returns while maintaining reasonable risk levels.

Dividends Info

  • Vanguard S&P 500 ETF 1.00%
  • Vanguard Total International Stock Index Fund ETF Shares 2.80%
  • Weighted yield (per year) 0.96%

The portfolio's dividend yield is modest at 0.96%, with Vanguard Total International Stock Index Fund ETF Shares contributing a higher yield of 2.80%. For income-focused investors, this yield might be insufficient. To enhance income, consider incorporating higher-dividend-paying stocks or funds. However, balance this with the need for growth, as high yields can sometimes indicate underlying risks.

Ongoing product costs Info

  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.05%
  • Weighted costs total (per year) 0.02%

The portfolio benefits from impressively low costs, with a total TER of 0.02%. This efficiency supports better long-term performance by minimizing expenses. Compared to industry averages, these costs are highly competitive, allowing more of your investment to work for you. Maintaining this cost advantage is crucial, so continue to monitor for any changes in fund fees or explore additional low-cost options.

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 can be optimized using the Efficient Frontier, which aims to achieve the best possible risk-return ratio with the current assets. This involves adjusting the allocations between existing holdings to maximize returns for a given level of risk. While this doesn't guarantee diversification, it can enhance the portfolio's efficiency. Regularly reviewing and adjusting allocations can help maintain an optimal balance.

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