A balanced dividend-focused portfolio with strong historical performance and moderate geographic diversification

Report created on Dec 15, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

This portfolio consists of two key ETFs, each contributing 50% to the total allocation. The Schwab U.S. Dividend Equity ETF and the Vanguard International Dividend Appreciation Index Fund ETF Shares form the foundation, focusing on dividend-paying stocks. This composition suggests a strategy prioritizing income through dividends while maintaining exposure to both U.S. and international markets. The equal weighting of these ETFs indicates a balanced approach, reducing reliance on a single market. Maintaining a balanced allocation can help manage risk, especially during volatile market conditions. Consider periodically reviewing the weightings to ensure they align with your investment goals.

Growth Info

Historically, this portfolio has demonstrated a Compound Annual Growth Rate (CAGR) of 11.31%, indicating solid long-term performance. However, it has also experienced a maximum drawdown of -32.2%, reflecting significant volatility during market downturns. Understanding past performance helps set realistic expectations for future returns, but it's essential to remember that past performance does not guarantee future results. To mitigate potential drawdowns, consider diversifying further or employing risk management strategies like stop-loss orders. Monitoring performance regularly can help you make timely adjustments to your investment strategy.

Projection Info

Forward projections using Monte Carlo simulations suggest a range of potential outcomes based on historical data patterns. With 1,000 simulations, the 5th percentile projects a modest 51.5% return, while the median (50th percentile) suggests a more robust 330.31% return. The 67th percentile projects an even higher 463.48% return. These simulations provide a probabilistic view of future performance, helping you understand potential risks and rewards. However, it's crucial to recognize that simulations are based on historical data and may not account for future market changes. Regularly reviewing and adjusting your portfolio can help navigate uncertainties.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted towards stocks, with 99.862% allocated to equities and a minimal 0.138% in cash. This concentration in a single asset class suggests a high-risk, high-reward strategy, as equities tend to offer greater returns but also higher volatility compared to other asset classes like bonds. Diversifying across different asset classes can help reduce risk and smooth out returns over time. Consider incorporating fixed-income securities or alternative investments to balance the equity exposure and enhance the portfolio's risk profile.

Sectors Info

  • Health Care
    18%
  • Financials
    17%
  • Industrials
    16%
  • Consumer Staples
    13%
  • Technology
    13%
  • Energy
    8%
  • Consumer Discretionary
    7%
  • Basic Materials
    4%
  • Telecommunications
    3%
  • Real Estate
    1%

Sector allocation is diverse, with significant holdings in healthcare, financial services, and industrials. This diversity helps mitigate sector-specific risks, as different sectors may perform differently under varying economic conditions. However, the portfolio also has notable concentrations, such as 17.65% in healthcare and 17.21% in financial services. While these sectors can provide stability and growth, it's essential to monitor their performance and adjust allocations as needed to maintain balance. Keeping an eye on sector trends can help you capitalize on emerging opportunities.

Regions Info

  • North America
    56%
  • Europe Developed
    24%
  • Japan
    13%
  • Asia Emerging
    4%
  • Asia Developed
    1%
  • Australasia
    1%

Geographically, the portfolio is predominantly focused on North America, with 55.99% exposure, followed by Europe Developed at 24.41% and Japan at 12.78%. This allocation provides a broad international perspective, reducing the risk associated with relying on a single region. However, the limited exposure to emerging markets may result in missed growth opportunities. Consider increasing geographic diversification by adding assets from underrepresented regions, which can enhance the portfolio's resilience against regional economic downturns and geopolitical risks.

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's current allocation can potentially be optimized using the Efficient Frontier, a concept that identifies the best possible risk-return ratio for a given set of assets. By adjusting the weightings of the existing ETFs, you may be able to achieve a more favorable balance between risk and return. However, it's essential to remember that optimization is based on historical data and assumptions, which may not hold in the future. Regularly reassessing the portfolio and making data-driven adjustments can help ensure that it remains aligned with your investment objectives.

Dividends Info

  • Schwab U.S. Dividend Equity ETF 2.60%
  • Vanguard International Dividend Appreciation Index Fund ETF Shares 2.00%
  • Weighted yield (per year) 2.30%

The portfolio boasts a respectable dividend yield of 2.3%, with the Schwab U.S. Dividend Equity ETF yielding 2.6% and the Vanguard International Dividend Appreciation Index Fund ETF Shares yielding 2.0%. Dividend income can provide a steady cash flow, which is particularly beneficial during periods of market volatility. Reinvesting dividends can enhance long-term growth through compounding, while using them as income can support financial goals. Regularly reviewing dividend yields and payout ratios can help ensure that the portfolio continues to meet your income needs and growth objectives.

Ongoing product costs Info

  • Schwab U.S. Dividend Equity ETF 0.06%
  • Vanguard International Dividend Appreciation Index Fund ETF Shares 0.15%
  • Weighted costs total (per year) 0.10%

With a total expense ratio of 0.1%, this portfolio is cost-effective, minimizing the impact of fees on overall returns. The Schwab U.S. Dividend Equity ETF has an expense ratio of 0.06%, while the Vanguard International Dividend Appreciation Index Fund ETF Shares charges 0.15%. Keeping costs low is crucial for maximizing net returns, as high fees can erode gains over time. Regularly reviewing and comparing expense ratios can help you identify opportunities to further reduce costs. Consider exploring other low-cost investment options to enhance the portfolio's cost-efficiency.

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