Balanced Portfolio with High US Exposure and Low Diversification Needs Optimization for Future Growth

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

What type of investor this portfolio is suitable for

Balanced Investors

This portfolio is suitable for an investor with a balanced risk tolerance who seeks growth through equities. They likely have a long-term investment horizon and are comfortable with market volatility. Their primary goal is capital appreciation, but they should be open to optimizing the portfolio for better diversification. While they may not prioritize income, they should be aware of the potential risks associated with a concentrated portfolio. This investor should be willing to explore additional asset classes and geographic regions to enhance diversification and long-term growth potential.

Positions

  • Vanguard Total Stock Market Index Fund ETF Shares
    VTI - US9229087690
    38.50%
  • Vanguard S&P 500 ETF
    VOO - US9229083632
    32.00%
  • Centrus Energy
    LEU - US15643U1043
    6.10%
  • Alphabet Inc Class A
    GOOGL - US02079K3059
    5.90%
  • Apple Inc
    AAPL - US0378331005
    3.80%
  • Advanced Micro Devices Inc
    AMD - US0079031078
    3.80%
  • Reddit, Inc.
    RDDT - US75734B1008
    3.80%
  • Microsoft Corporation
    MSFT - US5949181045
    2.50%
  • Invesco NASDAQ 100 ETF
    QQQM - US46138G6492
    2.40%
  • Vanguard Total International Stock Index Fund ETF Shares
    VXUS - US9219097683
    1.20%

The portfolio consists primarily of ETFs, with Vanguard Total Stock Market Index Fund ETF Shares and Vanguard S&P 500 ETF making up over 70%. It also includes a mix of individual stocks like Centrus Energy, Alphabet Inc, and Apple Inc. The portfolio leans heavily towards equities, with a minuscule allocation to cash and other asset classes. This composition suggests a focus on growth through broad market exposure, but it lacks diversification, especially internationally. To improve, consider adding more diverse asset classes and sectors to balance risk and potential returns.

Warning The historical data covers less than 2 years, which reduces the confidence in the calculated values.

Growth Info

Historically, this portfolio has performed exceptionally well, boasting a compound annual growth rate (CAGR) of 38.78%. The maximum drawdown of -11.46% indicates that while the portfolio has experienced some declines, it has largely maintained its value. The concentration of returns in just 12 days highlights the importance of staying invested during volatile periods. However, past performance does not guarantee future results. To maintain strong performance, consider strategies that can sustain growth while managing risk, such as diversification and regular portfolio reviews.

Warning Due to limited historical data, this may show extreme values that are not realistic.

Projection Info

Using a Monte-Carlo simulation with 1,000 iterations, the portfolio's future performance shows a wide range of potential outcomes. The simulation assumes a hypothetical initial investment and provides insights into possible returns. The median outcome suggests a substantial growth potential, but the wide variance also highlights the inherent uncertainty. While the 5th percentile indicates a low return scenario, the 67th percentile shows significant upside potential. To better manage this uncertainty, consider a more diversified portfolio that can provide more consistent returns across various market conditions.

Asset classes Info

  • Stocks
    100%
  • Cash
    0%
  • Other
    0%
  • No data
    0%

The portfolio is overwhelmingly concentrated in stocks, with nearly 100% allocated to this asset class. This heavy equity focus suggests a high-risk, high-reward investment approach. While stocks can offer substantial returns, they also come with increased volatility. To mitigate potential risks, consider incorporating other asset classes like bonds or real estate, which can provide stability and income. A more balanced allocation can help reduce the portfolio's overall risk and improve its resilience during market downturns, aligning better with a balanced risk profile.

Sectors Info

  • Technology
    34%
  • Telecommunications
    16%
  • Financials
    10%
  • Energy
    9%
  • Health Care
    8%
  • Consumer Discretionary
    8%
  • Industrials
    6%
  • Consumer Staples
    4%
  • Utilities
    2%
  • Real Estate
    2%
  • Basic Materials
    2%

The portfolio is heavily weighted towards the technology sector, comprising over 33% of the total allocation. Other sectors like communication services, financial services, and energy have significant representation, but there's limited exposure to defensive sectors like utilities and real estate. This sector concentration can lead to increased volatility and potential underperformance if technology faces a downturn. To enhance stability, consider reallocating some investments to underrepresented sectors. A more balanced sector allocation can help mitigate risks and provide a smoother return profile over the long term.

Regions Info

  • North America
    98%
  • Europe Developed
    1%
  • Asia Emerging
    0%
  • Japan
    0%
  • Asia Developed
    0%
  • Australasia
    0%
  • Latin America
    0%
  • Africa/Middle East
    0%
  • Europe Emerging
    0%

Geographically, the portfolio is highly concentrated in North America, with over 98% of assets allocated to this region. This lack of international diversification exposes the portfolio to region-specific risks and limits potential opportunities in global markets. While North American markets have performed well historically, a more geographically diversified portfolio could offer exposure to different economic cycles and growth prospects. Consider increasing allocations to developed and emerging markets outside North America to reduce geographic concentration and enhance long-term growth potential.

Redundant positions Info

  • Vanguard Total Stock Market Index Fund ETF Shares
    Invesco NASDAQ 100 ETF
    Vanguard S&P 500 ETF
    High correlation

Several assets in the portfolio, such as the Vanguard Total Stock Market Index Fund ETF Shares, Invesco NASDAQ 100 ETF, and Vanguard S&P 500 ETF, are highly correlated. This high correlation means these assets tend to move in the same direction, reducing the diversification benefits. While these ETFs provide broad market exposure, they do not add unique value to the portfolio. To improve diversification, consider including assets with lower correlations, which can provide a buffer during market volatility and contribute to a more stable return profile.

Dividends Info

  • Apple Inc 0.40%
  • Alphabet Inc Class A 0.20%
  • Microsoft Corporation 0.50%
  • Invesco NASDAQ 100 ETF 0.60%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Vanguard Total International Stock Index Fund ETF Shares 3.00%
  • Weighted yield (per year) 0.97%

The portfolio's dividend yield is relatively low, at 0.97%, with contributions primarily from ETFs like Vanguard S&P 500 ETF and Vanguard Total Stock Market Index Fund ETF Shares. While dividends can provide a steady income stream, the current yield might not be sufficient for investors seeking income. To enhance income potential, consider incorporating higher-yielding assets or dividend-focused funds. This can provide additional cash flow and help balance the portfolio's growth-oriented focus, especially for those who prioritize income generation alongside capital appreciation.

Ongoing product costs Info

  • Invesco NASDAQ 100 ETF 0.15%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.03%

The portfolio's costs are minimal, with a total expense ratio of 0.03%. This low-cost structure is a significant advantage, as it allows more of the portfolio's returns to be retained. Investing in low-cost ETFs, like those from Vanguard, helps keep expenses down, enhancing overall performance. However, it's essential to regularly review the cost structure to ensure it remains competitive. While low costs are beneficial, they should not be the sole factor in investment decisions. Balancing costs with diversification and risk management is crucial for long-term success.

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.

The portfolio could benefit from optimization to align with the efficient frontier, which represents the best risk-return trade-off. Currently, the portfolio's expected return is below the optimal level, indicating room for improvement. To achieve an efficient portfolio, consider reducing overlapping assets and increasing diversification across different sectors and regions. This can help enhance returns without significantly increasing risk. By optimizing the portfolio, investors can potentially achieve higher returns while maintaining a balanced risk profile, ensuring a more resilient investment strategy over time.

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