A cautiously diversified portfolio leaning towards US equities with a focus on large caps

Report created on Aug 20, 2025

Risk profile Info

3/7
Cautious
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio is predominantly invested in U.S. equities, specifically large-cap stocks, with a significant allocation to a U.S. Treasury Money Fund, reflecting a cautious risk profile. The emphasis on large-cap ETFs and a treasury fund suggests a preference for stability and lower volatility. However, this composition may limit growth potential and diversification benefits, especially in global markets.

Growth Info

Historical performance, with a Compound Annual Growth Rate (CAGR) of 16.08%, is impressive, especially considering the cautious risk classification. The maximum drawdown of -13.57% indicates resilience during market downturns. However, it's important to remember that past performance is not indicative of future results, and a cautious approach may not always yield such high returns.

Projection Info

Monte Carlo simulations project a wide range of potential outcomes, with a median annualized return of 18.87%. While encouraging, these projections are based on historical data and assumptions that may not hold true in the future. Investors should consider these projections as one of many tools in their decision-making process, not a guaranteed forecast.

Asset classes Info

  • Stocks
    61%
  • Bonds
    13%

The allocation towards stocks (61%) compared to bonds (13%) and the lack of cash or other asset classes indicates a tilt towards growth within a cautious framework. This stock-heavy approach in a cautious portfolio underscores the reliance on large-cap equities for stability and growth, potentially overlooking opportunities in bonds or alternative assets for diversification.

Sectors Info

  • Technology
    21%
  • Financials
    9%
  • Consumer Discretionary
    7%
  • Telecommunications
    6%
  • Industrials
    5%
  • Health Care
    5%
  • Consumer Staples
    2%
  • Energy
    2%
  • Basic Materials
    2%
  • Utilities
    1%
  • Real Estate
    1%

The sector allocation shows a heavy emphasis on technology, financial services, and consumer cyclicals, which are sectors typically associated with growth. This focus may increase vulnerability to sector-specific risks and market volatility. Diversifying across a broader range of sectors could help mitigate these risks.

Regions Info

  • North America
    53%
  • Europe Developed
    5%
  • Japan
    2%
  • Australasia
    1%

The geographic allocation is heavily skewed towards North America, with minimal exposure to international markets. This concentration risks over-reliance on the performance of the U.S. market and misses out on potential growth opportunities in developed and emerging markets abroad.

Market capitalization Info

  • Mega-cap
    30%
  • Large-cap
    15%
  • Mid-cap
    10%
  • Small-cap
    4%
  • Micro-cap
    2%

The portfolio's focus on mega and big cap stocks aligns with its cautious profile, as these companies generally offer more stability than their smaller counterparts. However, this focus may also limit potential for high growth rates that smaller companies can offer, suggesting a review of market cap allocation could be beneficial.

Redundant positions Info

  • Schwab U.S. Large-Cap ETF
    Schwab U.S. Large-Cap Growth ETF
    Schwab U.S. Broad Market ETF
    High correlation

The high correlation among the large-cap ETFs indicates redundancy, which could be limiting the portfolio's diversification benefits. Reducing overlap by reallocating assets from highly correlated investments to less correlated options could enhance portfolio efficiency without necessarily increasing 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.

The current portfolio could be optimized for a more efficient risk-return trade-off. By addressing the high correlation among certain assets and potentially diversifying further both geographically and across sectors, the portfolio could achieve a higher expected return of 5.63% at a similar risk level. This suggests room for improvement in diversification without compromising the cautious risk profile.

Dividends Info

  • Avantis® International Small Cap Value ETF 3.60%
  • Avantis® U.S. Small Cap Value ETF 1.70%
  • Invesco S&P International Developed Momentum ETF 1.90%
  • Schwab U.S. Broad Market ETF 1.20%
  • Schwab International Equity ETF 2.50%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Schwab U.S. Large-Cap ETF 1.10%
  • Schwab International Dividend Equity ETF 3.70%
  • Schwab Strategic Trust 7.10%
  • The Charles Schwab Family of Funds - Schwab U.S. Treasury Money Fund 3.40%
  • Weighted yield (per year) 2.50%

The portfolio's dividend yield of 2.50% contributes to its total return, providing a steady income stream. This is particularly beneficial in a cautious investment strategy, where income can offset periods of slow capital growth. However, investors should balance the pursuit of dividends with the need for capital appreciation and diversification.

Ongoing product costs Info

  • Avantis® International Small Cap Value ETF 0.36%
  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Invesco S&P International Developed Momentum ETF 0.25%
  • Schwab U.S. Broad Market ETF 0.03%
  • Schwab International Equity ETF 0.06%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Schwab U.S. Large-Cap ETF 0.03%
  • Schwab International Dividend Equity ETF 0.14%
  • Schwab Strategic Trust 0.03%
  • Weighted costs total (per year) 0.05%

With a total expense ratio (TER) of 0.05%, the portfolio's costs are impressively low, supporting better long-term performance by minimizing the drag on returns. This efficient cost structure is a strength, particularly in a cautious strategy where every basis point of return matters.

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