Balanced Portfolio with Strong Diversification and Moderate Risk for Long-Term Growth and Stability

Report created on Jul 8, 2024

Risk profile Info

4/7
Balanced
← Less risk More risk →

Diversification profile Info

4/5
Broadly Diversified
← Less diversification More diversification →

Positions

The portfolio consists of a diverse mix of ETFs, with a significant allocation to the Vanguard S&P 500 ETF at 40%. Other notable positions include Avantis U.S. Small Cap Value ETF and various international and emerging market ETFs. This composition indicates a balanced approach, aimed at capturing growth across different market caps and geographies. The blend of large-cap, small-cap, and international equities suggests a well-rounded strategy. However, the portfolio is heavily equity-focused with minimal allocation to other asset classes, which may limit its ability to cushion against market volatility.

Growth Info

Historically, the portfolio has delivered an impressive CAGR of 14.01%, with a maximum drawdown of -17.52%. This performance indicates resilience and strong growth potential, although it has experienced periods of volatility. The concentration in equities, particularly the S&P 500, has likely contributed to this robust performance. Despite the drawdown, the overall returns suggest effective risk management and potential for long-term wealth accumulation. To maintain or improve this performance, consider periodic reviews to ensure alignment with market conditions and personal financial goals.

Projection Info

Using a Monte Carlo simulation with 1,000 iterations, the portfolio shows promising future growth potential. The median projection indicates a 365.32% return, with a 67th percentile projection of 539.6%. This simulation provides a range of possible outcomes, helping to understand potential risks and returns. With 990 simulations showing positive returns, the portfolio appears well-positioned for future success. However, it's important to remain aware of market fluctuations and adjust allocations as needed to stay on track with financial objectives.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted in equities, with over 99% allocation to stocks. This focus on stocks suggests a growth-oriented strategy, but also exposes the portfolio to higher volatility. The minimal presence of bonds or other asset classes may limit diversification benefits and risk mitigation. For a more balanced approach, consider incorporating bonds or other assets to provide stability and reduce risk during market downturns. Adjusting the asset class mix can help align the portfolio with risk tolerance and long-term financial goals.

Sectors Info

  • Technology
    20%
  • Financials
    19%
  • Industrials
    13%
  • Consumer Discretionary
    13%
  • Health Care
    7%
  • Basic Materials
    7%
  • Energy
    7%
  • Telecommunications
    6%
  • Consumer Staples
    5%
  • Utilities
    2%
  • Real Estate
    2%

The sector allocation is diverse, with significant exposure to technology (20.46%), financial services (18.67%), and industrials (12.84%). This distribution indicates a focus on sectors with growth potential, but also exposes the portfolio to sector-specific risks. The presence of consumer cyclicals, healthcare, and basic materials adds further diversification. To enhance sector balance, consider monitoring sector performance and adjusting allocations to mitigate risk and capitalize on emerging opportunities. A well-rounded sector mix can help achieve consistent returns and reduce exposure to market volatility.

Regions Info

  • North America
    62%
  • Europe Developed
    13%
  • Asia Emerging
    8%
  • Japan
    7%
  • Asia Developed
    5%
  • Australasia
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is predominantly invested in North America, accounting for 62.35% of the allocation. Other key regions include Europe Developed and Asia Emerging. This geographic spread suggests a focus on developed markets with some exposure to emerging economies for growth potential. While this provides a level of diversification, the heavy North American focus may limit exposure to global opportunities. Consider increasing allocation to underrepresented regions to enhance geographic diversification and capture growth in emerging markets.

Redundant positions Info

  • Dimensional ETF Trust - Dimensional International Small Cap Value ETF
    Dimensional International Core Equity Market ETF
    Avantis® International Small Cap Value ETF
    High correlation
  • Avantis® Emerging Markets Value ETF
    Avantis® Emerging Markets Equity ETF
    Dimensional ETF Trust - Dimensional Emerging Markets Value ETF
    High correlation
  • Vanguard S&P 500 ETF
    Schwab U.S. Large-Cap Growth ETF
    High correlation

Several assets within the portfolio exhibit high correlation, particularly among international small-cap and emerging market ETFs. This overlap may reduce diversification benefits and increase vulnerability to market swings in specific regions. While correlated assets can provide stability, excessive correlation can limit the portfolio's ability to respond to diverse market conditions. To optimize diversification, consider evaluating and potentially reducing holdings in highly correlated assets. This adjustment can help achieve a more balanced risk-return profile and improve overall portfolio resilience.

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.

Before optimizing the portfolio, focus on reducing overlapping assets that provide no diversification benefits. The presence of highly correlated ETFs can be streamlined to enhance portfolio efficiency. Moving along the efficient frontier, investors can adjust their risk exposure by reallocating assets. For a riskier portfolio, increase allocation to growth-oriented equities, while a more conservative approach involves adding bonds or income-generating assets. This strategic adjustment can help align the portfolio with personal risk tolerance and financial goals, maximizing returns while managing risk effectively.

Dividends Info

  • Avantis® International Small Cap Value ETF 3.10%
  • Avantis® Emerging Markets Equity ETF 2.80%
  • Avantis® Emerging Markets Value ETF 3.70%
  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Dimensional International Core Equity Market ETF 2.50%
  • Dimensional ETF Trust - Dimensional Emerging Markets Value ETF 2.80%
  • Dimensional ETF Trust - Dimensional International Small Cap Value ETF 2.80%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Vanguard S&P 500 ETF 1.20%
  • Weighted yield (per year) 1.89%

The portfolio's dividend yield stands at 1.89%, with the highest contributions from Avantis Emerging Markets Value ETF and Avantis International Small Cap Value ETF. This yield provides a modest income stream, supplementing capital appreciation. However, the focus on growth-oriented equities may limit dividend income. For investors seeking higher income, consider increasing exposure to dividend-focused assets. Balancing growth and income can enhance portfolio stability and provide a reliable income source, especially during market downturns.

Ongoing product costs Info

  • Avantis® International Small Cap Value ETF 0.36%
  • Avantis® Emerging Markets Equity ETF 0.33%
  • Avantis® Emerging Markets Value ETF 0.36%
  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Dimensional International Core Equity Market ETF 0.18%
  • Dimensional ETF Trust - Dimensional Emerging Markets Value ETF 0.43%
  • Dimensional ETF Trust - Dimensional International Small Cap Value ETF 0.42%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.18%

The portfolio's total expense ratio is 0.18%, with the lowest costs from the Vanguard S&P 500 ETF and Schwab U.S. Large-Cap Growth ETF. These low costs contribute to higher net returns over time. However, some ETFs, such as Dimensional Emerging Markets Value ETF, have higher fees, which could impact overall performance. To keep costs low, regularly review and assess the expense ratios of holdings. Opting for low-cost ETFs can enhance long-term returns and support financial goals without sacrificing diversification or growth potential.

What next?

Ready to invest in this portfolio?

Select a broker that fits your needs and watch for low fees to maximize your returns.

Select broker

Create your own report?

Analyze your portfolio

Join our community!

Join Discord

The information provided on this platform is for informational purposes only and should not be considered as financial or investment advice. Insightfolio does not provide investment advice, personalized recommendations, or guidance regarding the purchase, holding, or sale of financial assets. The tools and content are intended for educational purposes only and are not tailored to individual circumstances, financial needs, or objectives.

Insightfolio assumes no liability for the accuracy, completeness, or reliability of the information presented. Users are solely responsible for verifying the information and making independent decisions based on their own research and careful consideration. Use of the platform should not replace consultation with qualified financial professionals.

Investments involve risks. Users should be aware that the value of investments may fluctuate and that past performance is not an indicator of future results. Investment decisions should be based on personal financial goals, risk tolerance, and independent evaluation of relevant information.

Insightfolio does not endorse or guarantee the suitability of any particular financial product, security, or strategy. Any projections, forecasts, or hypothetical scenarios presented on the platform are for illustrative purposes only and are not guarantees of future outcomes.

By accessing the services, information, or content offered by Insightfolio, users acknowledge and agree to these terms of the disclaimer. If you do not agree to these terms, please do not use our platform.

Instrument logos provided by Elbstream.

Help us improve Insightfolio

Your feedback makes a difference! Share your thoughts in our quick survey. Take the survey