A U.S.-centric portfolio with strong equity focus and minimal diversification

Report created on Feb 10, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

1/5
Single-Focused
Less diversification More diversification

Positions

The portfolio is heavily weighted towards U.S. equities, with the Vanguard S&P 500 ETF comprising nearly 60% and the Vanguard Total Stock Market Index Fund ETF adding another 22%. This concentration in large-cap U.S. stocks aligns with common benchmarks but limits diversification. While the inclusion of the PIMCO Energy & Tactical Credit Opps Fund and gold ETFs adds some variety, their small allocations minimize their impact. A more balanced distribution across different asset types could enhance diversification and risk management.

Growth Info

Historically, the portfolio has performed well, boasting a CAGR of 17.49%. This indicates strong past growth, particularly given the U.S. equity market's robust performance. However, the max drawdown of nearly 21% highlights potential volatility. While past performance is informative, it's not a guarantee of future results. Comparing this to a benchmark, the portfolio's returns are impressive, but investors should consider the associated risks and whether these align with their objectives.

Projection Info

Monte Carlo simulations, which use historical data to predict future outcomes, suggest a wide range of potential returns, with a median growth of 778.8%. This method provides a probabilistic view rather than a certainty, emphasizing possible outcomes rather than guarantees. While the projections are optimistic, they rely on past trends and should be interpreted with caution. Regular reassessment of market conditions and asset performance is recommended to adjust expectations and strategies accordingly.

Asset classes Info

  • Stocks
    96%
  • Bonds
    6%
  • Other
    2%

The portfolio is predominantly composed of stocks (96%), with minimal exposure to bonds (6%) and other assets (2%). This heavy equity weighting suggests a focus on growth but exposes the portfolio to significant market volatility. Diversifying across more asset classes, such as bonds or alternative investments, could provide stability and reduce risk. Aligning asset allocation with personal risk tolerance and financial goals is crucial for achieving a balanced investment approach.

Sectors Info

  • Technology
    30%
  • Financials
    11%
  • Consumer Discretionary
    10%
  • Health Care
    9%
  • Telecommunications
    8%
  • Industrials
    7%
  • Consumer Staples
    5%
  • Energy
    3%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    2%

Sector allocation is tilted towards technology (30%), which could lead to increased volatility, especially during market corrections or interest rate changes. While technology has been a strong performer, a more balanced sector distribution could mitigate sector-specific risks. Financial services and consumer cyclicals also have notable allocations. Investors might consider diversifying into other sectors, such as utilities or real estate, to further balance the portfolio against sector downturns.

Regions Info

  • North America
    97%
  • Europe Developed
    1%

The portfolio's geographic exposure is overwhelmingly concentrated in North America (97%), limiting international diversification. This focus may increase vulnerability to regional economic downturns. Diversifying into other regions, such as Europe or emerging markets, could reduce risk and capture growth opportunities in different economic environments. Balancing geographic exposure can help mitigate country-specific risks and align the portfolio with global market trends.

Market capitalization Info

  • Mega-cap
    41%
  • Large-cap
    30%
  • Mid-cap
    16%
  • Small-cap
    2%

The portfolio is predominantly invested in mega-cap (41%) and big-cap (30%) stocks, providing stability and lower volatility. However, the limited exposure to small-cap (2%) and micro-cap (0%) stocks suggests missed opportunities for higher growth potential. Including a mix of smaller market capitalizations could enhance diversification and offer potential for greater returns, albeit with increased risk. Balancing market cap exposure can align with investor goals and risk tolerance.

Redundant positions Info

  • Vanguard S&P 500 ETF
    Vanguard Total Stock Market Index Fund ETF Shares
    High correlation

The portfolio's assets are highly correlated, particularly the Vanguard S&P 500 ETF and Vanguard Total Stock Market Index Fund ETF Shares. While correlation can indicate consistency, high correlation limits diversification benefits, especially during market downturns. Reducing overlap by selecting complementary assets with lower correlation could enhance risk management and improve overall portfolio efficiency. Diversifying asset selection can lead to a more resilient investment strategy.

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 can be optimized using the Efficient Frontier, focusing on the best risk-return ratio. Currently, overlapping assets limit diversification benefits. By reallocating between existing assets, the portfolio could achieve higher expected returns at a similar risk level. Optimization should consider personal risk tolerance and investment goals, ensuring that changes align with long-term objectives. Regularly reviewing and adjusting allocations can enhance portfolio efficiency and performance.

Dividends Info

  • PIMCO Energy & Tactical Credit Opps 4.70%
  • Invesco NASDAQ 100 ETF 0.60%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Weighted yield (per year) 1.42%

With a total dividend yield of 1.42%, the portfolio provides modest income, primarily from the PIMCO Energy & Tactical Credit Opps Fund. This yield may appeal to investors seeking income alongside growth. However, for those prioritizing income, increasing exposure to higher-yielding assets could be beneficial. Balancing growth and income is key to meeting diverse financial objectives, and adjusting the dividend strategy can enhance cash flow without sacrificing growth potential.

Ongoing product costs Info

  • VanEck Gold Miners ETF 0.51%
  • SPDR Gold MiniShares 0.10%
  • PIMCO Energy & Tactical Credit Opps 2.96%
  • Invesco NASDAQ 100 ETF 0.15%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.29%

The portfolio's total expense ratio (TER) is relatively low at 0.29%, supporting better long-term returns. The Vanguard ETFs are notably cost-effective, while the PIMCO fund has a higher expense ratio of 2.96%. Reducing costs can significantly impact net returns over time. Investors should regularly review fund fees and consider lower-cost alternatives to optimize performance. Maintaining a low-cost structure is advantageous for compounding returns and achieving financial goals.

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