Balanced portfolio with strong dividend focus and moderate global exposure

Report created on May 27, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

This portfolio is structured predominantly around U.S.-based equity ETFs, with a significant portion allocated to dividend-paying stocks. The allocation is split between 40% in a broad market ETF, 30% in a dividend equity ETF, and 30% in an international equity ETF. This composition indicates a balanced approach, leaning towards income generation through dividends while maintaining a broad exposure to the U.S. and international markets. Compared to a typical balanced portfolio, this one shows a heavier emphasis on equities, suggesting a slightly higher risk tolerance but with the cushioning effect of dividends.

Growth Info

The portfolio has demonstrated a Compound Annual Growth Rate (CAGR) of 11.21%, which is a robust performance, particularly in the context of its balanced classification. The maximum drawdown of -34.20% indicates a period of significant value decline, which is not uncommon in equity-focused portfolios. The days contributing to 90% of returns being concentrated in 24.0 days highlights the impact of short-term gains, underscoring the importance of staying invested through market cycles to capture these spikes.

Projection Info

Using a Monte Carlo simulation, which projects future performance by analyzing historical data to generate a range of outcomes, the portfolio shows a median potential growth of 299.9% over the simulation period. It's important to note that while this tool helps visualize different scenarios, it's based on past data, and future market conditions can diverge. The simulation's optimistic outlook, with 985 out of 1,000 simulations showing positive returns, suggests resilience but should be viewed with cautious optimism.

Asset classes Info

  • Stocks
    100%

The portfolio is entirely allocated to stocks, with no diversification into bonds, cash, or alternative asset classes. This concentration in equities enhances growth potential but also increases volatility and risk, particularly in market downturns. Diversifying across multiple asset classes can help mitigate these risks, providing a smoother investment journey, especially for those with a moderate risk tolerance.

Sectors Info

  • Technology
    19%
  • Financials
    16%
  • Industrials
    12%
  • Health Care
    11%
  • Consumer Staples
    10%
  • Consumer Discretionary
    10%
  • Energy
    8%
  • Telecommunications
    6%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    2%

Sector allocation is well-diversified, covering technology, financial services, industrials, healthcare, and consumer sectors among others. This diversification helps balance the portfolio's performance across different economic cycles. However, the emphasis on technology and financial services, sectors known for their volatility, may increase the portfolio's risk profile. Balancing sector exposure can further stabilize returns over time.

Regions Info

  • North America
    72%
  • Europe Developed
    17%
  • Japan
    6%
  • Asia Developed
    2%
  • Australasia
    2%

Geographically, the portfolio shows a strong bias towards North American equities (72%), with significant exposure to developed markets in Europe and Japan. The lack of exposure to emerging markets and other regions may limit growth potential and diversification benefits. Including assets from faster-growing economies could enhance returns and spread risk more broadly.

Market capitalization Info

  • Large-cap
    39%
  • Mega-cap
    33%
  • Mid-cap
    22%
  • Small-cap
    4%
  • Micro-cap
    1%

The market capitalization breakdown reveals a focus on big and mega-cap stocks, which tend to be more stable and less volatile than their smaller counterparts. This is aligned with the portfolio's balanced profile but may limit exposure to high-growth opportunities in the medium and small-cap segments. Increasing diversification across different market caps could potentially enhance returns while managing risk.

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.

Optimizing this portfolio using the Efficient Frontier could identify an allocation that offers the highest expected return for a given level of risk. Currently, the portfolio's heavy equity concentration and sector biases may not place it on the Efficient Frontier. Adjusting the asset allocation to include a broader range of asset classes and sectors could improve the risk-return profile, moving it closer to the optimal efficiency.

Dividends Info

  • Schwab U.S. Broad Market ETF 1.30%
  • Schwab U.S. Dividend Equity ETF 4.00%
  • Schwab International Equity ETF 2.80%
  • Weighted yield (per year) 2.56%

The portfolio's focus on dividend-paying ETFs contributes positively to its overall yield, with a total yield of 2.56%. This strategy not only provides a steady income stream but also offers potential for reinvestment and compounding. The higher yield from the dividend equity ETF is particularly notable and aligns with the portfolio's balanced, income-generating focus.

Ongoing product costs Info

  • Schwab U.S. Broad Market ETF 0.03%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Schwab International Equity ETF 0.06%
  • Weighted costs total (per year) 0.05%

With a total expense ratio (TER) of 0.05%, the portfolio benefits from low management costs, which can significantly enhance long-term returns. This cost efficiency is a strong point, especially in a low-yield environment, allowing more of the investment returns to compound over time.

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