A balanced portfolio with strong U.S. focus and moderate risk exposure

Report created on Mar 27, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

This portfolio is composed primarily of ETFs, with a strong emphasis on U.S. equities. The Vanguard S&P 500 ETF holds the largest share at 30%, followed by international stocks at 20%. The remaining assets are split among various sector-focused and dividend ETFs. This structure leans heavily on large-cap U.S. equities, which is typical for a balanced portfolio. While this allocation provides solid exposure to established markets, it may lack the diversity found in more globally diversified portfolios. Consider increasing exposure to other regions or asset classes to enhance diversification.

Growth Info

Historically, the portfolio has performed well, with a Compound Annual Growth Rate (CAGR) of 11.81%. This suggests a strong track record of returns, especially when compared to typical benchmarks. However, it's important to remember that past performance doesn't guarantee future results. The maximum drawdown of -24.19% indicates potential vulnerability during market downturns. This level of volatility is expected in a portfolio with significant equity exposure. To mitigate risk, consider adding more defensive assets or increasing cash reserves.

Projection Info

The Monte Carlo simulation, a method that uses historical data to project future outcomes, indicates a wide range of potential returns. With 1,000 simulations, the median projection shows a 332.8% increase, while the 5th percentile suggests a 49.8% gain. This highlights the uncertainty inherent in investing, as outcomes can vary widely based on market conditions. While the simulations are optimistic, it's crucial to understand these are estimates, not guarantees. Regularly reviewing and adjusting the portfolio can help align it with changing risk tolerance and market conditions.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio is overwhelmingly allocated to stocks, making up 99% of the assets, with a negligible amount in cash. This concentration in equities suggests a focus on growth, which could lead to substantial returns but also increased volatility. Diversification across asset classes, such as bonds or real estate, could help mitigate risks associated with stock market fluctuations. A more balanced approach might provide a smoother ride during turbulent market periods, aligning with the balanced risk profile of the portfolio.

Sectors Info

  • Technology
    25%
  • Health Care
    20%
  • Financials
    13%
  • Consumer Discretionary
    10%
  • Industrials
    8%
  • Telecommunications
    8%
  • Consumer Staples
    7%
  • Energy
    4%
  • Basic Materials
    2%
  • Utilities
    2%
  • Real Estate
    2%

Sector allocation shows a notable concentration in technology (25%) and healthcare (20%), aligning with current market trends. While these sectors have driven growth recently, they also introduce sector-specific risks. For instance, tech-heavy portfolios may face volatility during interest rate hikes. The portfolio's sector composition generally aligns with benchmark data, indicating good diversification. However, consider monitoring sector performance closely and adjusting allocations to maintain balance and mitigate potential risks.

Regions Info

  • North America
    81%
  • Europe Developed
    8%
  • Asia Emerging
    3%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

Geographic allocation is heavily skewed towards North America, accounting for 81% of the portfolio. This focus on the U.S. market provides stability but limits exposure to international growth opportunities. With only 8% in Europe Developed and minimal allocations in emerging markets, the portfolio may miss out on potential gains from global economic expansion. To enhance diversification and reduce reliance on the U.S. market, consider increasing exposure to international and emerging markets.

Market capitalization Info

  • Large-cap
    40%
  • Mega-cap
    37%
  • Mid-cap
    18%
  • Small-cap
    3%
  • Micro-cap
    1%

The portfolio is well-distributed across market capitalizations, with 40% in big-cap and 37% in mega-cap stocks. This focus on larger companies typically offers stability and lower volatility. However, only 3% is allocated to small-cap stocks, which can provide higher growth potential but come with increased risk. Balancing market capitalization exposure can enhance diversification and capture opportunities across different company sizes. Consider slightly increasing small and mid-cap allocations for a more balanced approach.

Redundant positions Info

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

The portfolio contains highly correlated assets, particularly between the Vanguard Total Stock Market Index Fund ETF and the Vanguard S&P 500 ETF. High correlation means these assets tend to move together, reducing diversification benefits. In a market downturn, this could amplify losses. To enhance diversification, consider replacing one of these ETFs with assets that have lower correlation to the rest of the portfolio. This change could improve risk management and optimize returns over the long term.

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, a concept that identifies the best possible risk-return ratio based on current assets. This involves adjusting asset weights to achieve the highest expected return for a given level of risk. However, optimization should focus on existing assets rather than adding new ones. Removing highly correlated assets, like the overlapping ETFs, can enhance diversification and improve efficiency. This approach ensures the portfolio is well-positioned for future growth while managing risk effectively.

Dividends Info

  • Invesco NASDAQ 100 ETF 0.50%
  • Schwab U.S. Dividend Equity ETF 2.80%
  • Vanguard Health Care Index Fund ETF Shares 1.20%
  • Vanguard S&P 500 ETF 1.00%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.00%
  • Vanguard Total International Stock Index Fund ETF Shares 2.80%
  • Weighted yield (per year) 1.58%

The portfolio's average dividend yield stands at 1.58%, with the Schwab U.S. Dividend Equity ETF and Vanguard Total International Stock Index Fund ETF Shares contributing the highest yields at 2.80%. Dividend income can provide a steady cash flow, which is beneficial for reinvestment or income needs. This yield aligns well with a balanced portfolio's objective of combining growth and income. To further enhance income potential, consider adding more high-yield dividend stocks or funds, while maintaining a focus on quality and sustainability.

Ongoing product costs Info

  • Invesco NASDAQ 100 ETF 0.15%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Vanguard Health Care Index Fund ETF Shares 0.10%
  • 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 0.05%
  • Weighted costs total (per year) 0.06%

The portfolio's total expense ratio (TER) is impressively low at 0.06%, which supports better long-term performance by minimizing costs. Lower costs mean more of your investment returns stay in your pocket, compounding over time. This efficient cost structure is a strong point of the portfolio. To maintain this advantage, continue monitoring and managing expenses, especially if considering changes or additions to the portfolio. Keeping costs low is a key strategy for maximizing net returns.

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