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A balanced US-focused portfolio with significant tech exposure and moderate international diversification

Report created on Dec 26, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification
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Positions

This portfolio predominantly consists of ETFs, with a heavy allocation toward the Vanguard S&P 500 ETF at 35% and a notable presence in the Invesco NASDAQ 100 ETF at 20%. The Schwab U.S. Dividend Equity ETF and Vanguard Total International Stock Index Fund ETF Shares add diversification, each at 20% and 15% respectively. The Schwab U.S. Large-Cap Growth ETF rounds out the portfolio at 10%. Compared to typical benchmarks, this composition leans heavily on large-cap US equities, with a moderate tilt towards growth and dividends, aligning with a balanced investment strategy.

Growth Info

Historically, the portfolio has delivered a robust Compound Annual Growth Rate (CAGR) of 14.38%, outperforming many standard benchmarks. The maximum drawdown of -25.67% indicates it has experienced significant volatility, though this is not uncommon for equity-heavy portfolios. With 20 days accounting for 90% of returns, this indicates the potential for concentrated gains. While past performance is not indicative of future results, these figures suggest a solid track record of growth, supporting the portfolio's balanced risk profile.

Projection Info

Using Monte Carlo simulations, which apply historical data to project future outcomes, the portfolio shows a promising outlook. With a median expected growth of 498.25% over the simulation period, the results suggest a potential for substantial returns. However, it's crucial to note that these projections are based on historical trends and market conditions, which may not repeat. The simulations indicate that the portfolio is likely to continue its growth trajectory, though investors should remain aware of the inherent uncertainties in market predictions.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio is heavily weighted towards stocks, comprising approximately 99.45% of the asset allocation, with minimal cash and other holdings. This high equity concentration aligns with the goal of achieving growth but may expose the portfolio to market volatility. Compared to diversified benchmarks, the lack of bonds or alternative assets suggests a focus on capital appreciation over income stability. To enhance diversification, consider integrating other asset classes, like bonds, which can provide stability during market downturns.

Sectors Info

  • Technology
    31%
  • Financials
    13%
  • Consumer Discretionary
    12%
  • Health Care
    10%
  • Telecommunications
    9%
  • Industrials
    8%
  • Consumer Staples
    7%
  • Energy
    5%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    1%

The sector allocation reveals a significant concentration in technology at 30.6%, followed by financial services and consumer cyclicals. This tech-heavy focus can lead to increased volatility, particularly during periods of rising interest rates or regulatory changes. While the portfolio benefits from exposure to various sectors, the dominance of technology suggests the need for careful monitoring of sector trends. Balancing this with defensive sectors could help mitigate risks associated with economic downturns.

Regions Info

  • North America
    85%
  • Europe Developed
    6%
  • Asia Emerging
    3%
  • Japan
    2%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

The portfolio's geographic exposure is predominantly North American at 85.4%, with limited international diversification. Europe and Asia make up smaller portions, indicating a potential underexposure to emerging markets. While this North American focus aligns with many US-based investors' preferences, it may limit opportunities for growth in faster-growing economies. To enhance global diversification, consider increasing exposure to regions like Asia or Latin America, which can offer additional growth potential.

Redundant positions Info

  • Schwab U.S. Large-Cap Growth ETF
    Invesco NASDAQ 100 ETF
    High correlation

The portfolio exhibits high correlation among certain assets, particularly between the Schwab U.S. Large-Cap Growth ETF and the Invesco NASDAQ 100 ETF. This correlation suggests limited diversification benefits, as these assets may move similarly during market fluctuations. Reducing exposure to highly correlated assets can help improve diversification and risk management. Consider reallocating funds to less correlated investments to enhance the portfolio's resilience against market volatility.

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.

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The portfolio's current asset allocation may benefit from optimization using the Efficient Frontier, which aims to achieve the best possible risk-return ratio. This involves adjusting the weights of existing assets to find the most efficient balance between risk and return. While the portfolio is already well-structured, exploring optimization opportunities could further enhance its performance. It's important to note that efficiency focuses solely on the current assets and does not necessarily address diversification or other goals.

Dividends Info

  • Invesco NASDAQ 100 ETF 0.40%
  • Schwab U.S. Dividend Equity ETF 3.60%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.30%
  • Weighted yield (per year) 1.76%

With a total dividend yield of 1.76%, the portfolio provides moderate income, primarily from the Schwab U.S. Dividend Equity ETF, which offers a 3.6% yield. This yield can be appealing for investors seeking income alongside growth. However, the overall yield remains modest compared to income-focused portfolios. For those prioritizing income, increasing allocation to higher-yielding assets may be beneficial. Conversely, maintaining the current yield aligns with a balanced strategy focusing on both growth and income.

Ongoing product costs Info

  • Invesco NASDAQ 100 ETF 0.15%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.07%

The portfolio's total expense ratio (TER) is impressively low at 0.07%, indicating efficient cost management. This low-cost structure supports better long-term performance by minimizing the impact of fees on returns. Compared to industry averages, these costs are favorable and align with best practices for cost-effective investing. Maintaining this low-cost approach is advisable, though periodically reviewing fund fees to ensure continued cost efficiency is a prudent strategy.

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