Balanced Portfolio with Strong US Focus and Low Diversity Offers Moderate Risk and High Growth Potential

Report created on Dec 3, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

The portfolio consists of four ETFs: Vanguard S&P 500, Invesco NASDAQ 100, Schwab U.S. Dividend Equity, and Avantis U.S. Small Cap Value. With a significant allocation in large-cap U.S. equities, it leans towards growth and income through dividends. This composition offers exposure to both established and smaller companies, but lacks diversification in terms of asset classes and regions. To improve resilience against market fluctuations, consider adding different asset classes like bonds or international equities.

Growth Info

Historically, the portfolio has performed well with a CAGR of 17.22%. Despite a max drawdown of -24.01%, it has shown resilience over time. The portfolio's concentrated nature means that its performance is closely tied to the U.S. market, especially the tech sector. While past performance is not indicative of future results, the historical data suggests a strong potential for growth. To maintain this performance, continuously review the portfolio's allocation and adjust as necessary to align with long-term goals.

Projection Info

Using a Monte Carlo simulation with 1,000 iterations, the portfolio shows a promising forward projection. A hypothetical initial investment could yield a median return of 839.32%, with a 67th percentile return of 1,208.02%. The simulation provides a range of potential outcomes, helping to understand the risk and reward balance. While the results are optimistic, it's important to recognize the inherent uncertainty in projections. Regularly revisiting the portfolio strategy and making adjustments based on changing market conditions can help manage risks.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted towards stocks, with 99.92% in equities and a negligible amount in cash. This high equity exposure suggests a focus on capital appreciation, but also increases vulnerability to market volatility. Diversifying into other asset classes, such as bonds or real estate, could help mitigate risk and provide more stability. A more balanced asset allocation can offer protection in downturns and contribute to achieving a more consistent performance over time.

Sectors Info

  • Technology
    30%
  • Financials
    13%
  • Consumer Discretionary
    12%
  • Telecommunications
    9%
  • Industrials
    9%
  • Health Care
    9%
  • Consumer Staples
    7%
  • Energy
    6%
  • Basic Materials
    2%
  • Utilities
    1%
  • Real Estate
    1%

Sector allocation is concentrated, with technology making up nearly 30% of the portfolio. Other significant sectors include financial services, consumer cyclicals, and communication services. This concentration can lead to increased volatility, especially if one sector underperforms. To enhance sector diversification, consider reallocating to include more defensive sectors like utilities or healthcare. A broader sector exposure can help cushion the portfolio against sector-specific downturns and contribute to overall stability.

Regions Info

  • North America
    99%
  • Europe Developed
    1%

Geographically, the portfolio is predominantly focused on North America, with 98.57% allocation. This concentration limits exposure to international markets, which can offer growth opportunities and diversification benefits. While the U.S. market has been strong, diversifying into developed and emerging markets could reduce geographic risk and enhance potential returns. Exploring global ETFs or funds can provide access to different economic cycles and growth prospects, helping to balance the portfolio's regional exposure.

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 by adjusting the asset allocation along the efficient frontier. Moving towards a riskier portfolio may involve increasing exposure to high-growth sectors or small-cap stocks, while a more conservative approach could involve adding bonds or defensive sectors. Before optimizing, focus on enhancing diversification across asset classes and regions. A well-diversified portfolio will provide a solid foundation, allowing for more effective optimization that aligns with individual risk preferences and investment goals.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Invesco NASDAQ 100 ETF 0.60%
  • Schwab U.S. Dividend Equity ETF 3.30%
  • Vanguard S&P 500 ETF 1.20%
  • Weighted yield (per year) 1.46%

The portfolio offers a moderate dividend yield of 1.46%, with the Schwab U.S. Dividend Equity ETF contributing the highest yield at 3.3%. Dividends provide a source of income and can help cushion against market volatility. However, the overall yield is modest due to the growth-oriented nature of the other ETFs. To increase income potential, consider reallocating to higher-yielding assets or funds. Balancing growth and income can enhance the portfolio's overall return profile and provide more consistent cash flow.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Invesco NASDAQ 100 ETF 0.15%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.11%

With a total expense ratio of 0.11%, the portfolio is cost-efficient, allowing more returns to be retained. The Vanguard S&P 500 ETF has the lowest cost at 0.03%, while the Avantis U.S. Small Cap Value ETF is the highest at 0.25%. Keeping investment costs low is crucial for maximizing net returns. Continuously monitoring and comparing expense ratios across similar funds can help ensure cost-effectiveness. Staying vigilant about fees will contribute to long-term portfolio performance and help achieve financial goals.

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