Balanced portfolio with strong U.S. focus and significant dividend exposure

Report created on Jan 22, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

This portfolio is heavily weighted towards ETFs, with the Vanguard S&P 500 ETF comprising nearly 38%. It's complemented by the Schwab U.S. Dividend Equity ETF at 26.53%, and a mix of tech-focused and dividend-oriented funds and stocks. The composition leans towards large-cap equities, typical for a balanced profile. This structure aligns with a focus on stability and growth but may lack sector and geographical diversification. Considering more diverse asset types could enhance resilience against market fluctuations and improve the diversification score.

Growth Info

Historically, the portfolio has shown an impressive CAGR of 21.31%, indicating robust growth over time. However, with a max drawdown of -12.28%, it also reflects a moderate level of risk during downturns. The portfolio's performance surpasses many benchmarks, which is promising for long-term growth. While past performance is not indicative of future results, maintaining a balanced risk-return profile is crucial. Regularly reviewing performance against benchmarks can help ensure alignment with investment goals.

Projection Info

Using Monte Carlo simulations, which predict future outcomes based on historical data, the portfolio shows a wide range of potential returns. With a median outcome of 5,215.3%, the projections suggest strong potential growth, albeit with inherent uncertainties. The simulations indicate that nearly all scenarios yield positive returns, which is encouraging. However, it's important to remember that these projections are based on past data, and actual future performance can vary. Regular portfolio reviews and adjustments are recommended to align with changing market conditions.

Asset classes Info

  • Stocks
    100%

The portfolio is entirely composed of stocks, which limits its diversification benefits. While stocks typically offer higher returns, they also come with higher volatility. Diversification across asset classes, such as bonds or real estate, can reduce risk and provide more stability. Comparing this allocation to benchmarks reveals a lack of fixed-income exposure, which could help cushion against stock market volatility. Introducing a mix of asset classes could enhance the portfolio's resilience and align it with broader diversification norms.

Sectors Info

  • Technology
    34%
  • Financials
    15%
  • Health Care
    9%
  • Consumer Staples
    9%
  • Telecommunications
    8%
  • Consumer Discretionary
    8%
  • Industrials
    7%
  • Energy
    5%
  • Utilities
    1%
  • Basic Materials
    1%
  • Real Estate
    1%

Sector-wise, the portfolio is heavily tilted towards technology, making up 34% of the allocation. This concentration can lead to higher volatility, especially during tech sector downturns. Other sectors like financial services and healthcare provide some balance but are underrepresented compared to typical benchmarks. Diversifying into sectors like utilities or consumer staples could reduce risk and enhance stability. Monitoring sector trends and adjusting allocations accordingly can help manage sector-specific risks and capitalize on growth opportunities.

Regions Info

  • North America
    99%
  • Europe Developed
    1%

Geographically, the portfolio is overwhelmingly concentrated in North America, with 99% exposure. This lack of international diversification can increase risk, particularly if the U.S. market underperforms. Including more global equities could mitigate this risk and provide exposure to diverse economic cycles. Comparing to benchmarks that typically include more international exposure highlights this imbalance. Exploring opportunities in emerging markets or developed economies outside North America could enhance diversification and growth potential.

Market capitalization Info

  • Mega-cap
    41%
  • Large-cap
    38%
  • Mid-cap
    17%
  • Small-cap
    3%
  • Micro-cap
    1%

The portfolio is predominantly invested in mega and big-cap stocks, accounting for 79% of the allocation. While large-cap stocks offer stability and established growth, they may limit potential for outsized gains compared to smaller companies. Incorporating more mid and small-cap stocks could enhance growth potential and diversify risk. This allocation aligns with a conservative approach, but adding exposure to smaller market capitalizations could provide a balance of stability and growth.

Redundant positions Info

  • Schwab U.S. Dividend Equity ETF
    Vanguard High Dividend Yield Index Fund ETF Shares
    High correlation

The portfolio contains highly correlated assets, particularly among dividend-focused ETFs, which can limit diversification benefits. When assets move in tandem, the portfolio may not be as resilient during market downturns. Reducing exposure to overlapping assets and adding uncorrelated investments could enhance diversification. This strategy can help mitigate risk and improve the portfolio's ability to withstand market volatility, ensuring a more balanced risk-return profile.

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.

Optimizing this portfolio using the Efficient Frontier could improve its risk-return balance. The Efficient Frontier helps identify the best possible allocation for a given level of risk. By adjusting the weights of current assets, the portfolio can potentially achieve a better risk-return ratio without adding new assets. This process can enhance performance and align with investment goals. Regular optimization reviews can ensure the portfolio remains efficient as market conditions change.

Dividends Info

  • Caterpillar Inc 1.00%
  • Alphabet Inc Class C 0.30%
  • JPMorgan Equity Premium Income ETF 7.20%
  • JPMorgan Chase & Co 1.30%
  • The Coca-Cola Company 3.10%
  • Mastercard Inc 0.40%
  • Meta Platforms Inc. 0.30%
  • Microsoft Corporation 0.70%
  • Schwab U.S. Dividend Equity ETF 3.50%
  • SHP ETF Trust - NEOS S&P 500 High Income ETF 11.80%
  • Vanguard Information Technology Index Fund ETF Shares 0.60%
  • Vanguard Dividend Appreciation Index Fund ETF Shares 1.70%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard High Dividend Yield Index Fund ETF Shares 2.60%
  • Vanguard International High Dividend Yield Index Fund ETF Shares 4.70%
  • Walmart Inc 0.90%
  • Weighted yield (per year) 2.07%

With a total dividend yield of 2.07%, the portfolio provides a moderate income stream, appealing to those seeking regular payouts. High-yield components, like the SHP ETF Trust, significantly boost overall yield. Dividends can enhance returns, especially in low-growth environments. However, relying heavily on dividends may limit growth potential. Balancing dividend income with growth-focused investments can provide a steady income while maintaining the potential for capital appreciation.

Ongoing product costs Info

  • JPMorgan Equity Premium Income ETF 0.35%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • SHP ETF Trust - NEOS S&P 500 High Income ETF 0.68%
  • Vanguard Information Technology Index Fund ETF Shares 0.10%
  • Vanguard Dividend Appreciation Index Fund ETF Shares 0.06%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard High Dividend Yield Index Fund ETF Shares 0.06%
  • Vanguard International High Dividend Yield Index Fund ETF Shares 0.22%
  • Weighted costs total (per year) 0.06%

The portfolio's total expense ratio is impressively low at 0.06%, which is beneficial for long-term performance. Low costs mean more of your returns stay in your pocket, compounding over time. This cost efficiency aligns with best practices for maximizing net returns. Maintaining a focus on cost-effective investments can significantly enhance long-term growth. Regularly reviewing expense ratios and seeking low-cost alternatives can help sustain this advantage.

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