A balanced portfolio focused on the S&P 500 with low diversification and low costs

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 suits an investor seeking growth with moderate risk tolerance and a focus on U.S. equities. It emphasizes capital appreciation through exposure to large-cap stocks while maintaining low costs. With a long-term investment horizon, this portfolio is ideal for individuals looking to build wealth over time, although it may benefit from increased diversification to manage risk more effectively.

Positions

  • Vanguard S&P 500 ETF
    VOO - US9229083632
    100.00%

The portfolio is entirely composed of the Vanguard S&P 500 ETF, representing a 100% allocation to this single asset. This implies a strong focus on U.S. large-cap equities, as the S&P 500 is a benchmark index for the largest companies in the U.S. While this provides exposure to a broad range of sectors, the lack of diversification across different asset classes and regions may increase vulnerability to market-specific risks. Considering a more diversified approach by including other asset classes like bonds or international equities could help mitigate potential market downturns.

Growth Info

Historically, the portfolio has shown robust performance with a Compound Annual Growth Rate (CAGR) of 13.42%. This indicates strong growth over time, surpassing many traditional savings options. However, it's essential to note the maximum drawdown of -34.02%, highlighting the potential for significant losses during market downturns. Past performance does not guarantee future outcomes, so maintaining a diversified portfolio could help manage risk while aiming for similar returns.

Projection Info

The forward projection using Monte Carlo simulations provides a range of possible outcomes based on historical data. With 1,000 simulations, the portfolio's potential end value ranges from an 88.7% increase at the 5th percentile to a 604.8% increase at the 67th percentile. While the average annualized return is projected at 13.95%, it's crucial to understand that simulations rely on historical trends, and actual future performance may vary. Diversifying the portfolio could help stabilize returns across different market conditions.

Asset classes Info

  • Stocks
    100%
  • Cash
    0%

The portfolio's allocation is solely in stocks, which can offer high growth potential but also comes with increased risk. A more diversified portfolio typically includes a mix of asset classes like bonds, which can provide stability and income. By spreading investments across different asset types, investors can better manage risk and potentially enhance returns over time. Considering the addition of bonds or other asset classes could create a more balanced risk-return profile.

Sectors Info

  • Technology
    32%
  • Financials
    14%
  • Consumer Discretionary
    12%
  • Health Care
    10%
  • Telecommunications
    10%
  • Industrials
    7%
  • Consumer Staples
    5%
  • Energy
    3%
  • Utilities
    3%
  • Real Estate
    2%
  • Basic Materials
    2%

The sector allocation is heavily weighted towards technology at 32%, followed by financial services and consumer cyclicals. While these sectors have driven growth in recent years, they may also experience higher volatility, especially during economic shifts or interest rate changes. A sector-balanced approach can mitigate risks associated with sector-specific downturns. Evaluating sector exposure and considering more balanced allocations could help maintain stability across various market conditions.

Regions Info

  • North America
    99%
  • Europe Developed
    1%
  • Asia Developed
    0%

With 99% of the portfolio allocated to North America, there is minimal geographic diversification. This heavy reliance on the U.S. market could expose the portfolio to regional economic risks. Including international equities can provide exposure to different economic cycles and growth opportunities. A more geographically diverse portfolio can help manage risk and capture growth in various markets, potentially improving long-term returns.

Market capitalization Info

  • Mega-cap
    47%
  • Large-cap
    35%
  • Mid-cap
    18%
  • Small-cap
    1%

The portfolio is primarily invested in mega and large-cap stocks, which are typically stable and well-established companies. This focus can offer steady growth but may miss out on the higher growth potential of small and mid-cap stocks. Including a mix of market capitalizations can enhance diversification and capture growth opportunities across different company sizes. A balanced allocation could provide a more comprehensive risk-return profile.

Dividends Info

  • Vanguard S&P 500 ETF 1.40%
  • Weighted yield (per year) 1.40%

The portfolio's dividend yield is 1.40%, providing a modest income stream. Dividends can be an essential component of total returns, especially in low-growth environments. However, relying solely on this yield may not be sufficient for income-focused investors. Incorporating higher-yielding assets, such as dividend-focused funds or bonds, could enhance income generation while maintaining growth potential.

Ongoing product costs Info

  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.03%

The portfolio benefits from exceptionally low costs, with a Total Expense Ratio (TER) of 0.03%. This cost efficiency supports better long-term performance by minimizing the drag on returns. Keeping expenses low is crucial for maximizing net gains, especially over extended investment horizons. Maintaining a focus on low-cost investments can continue to enhance the portfolio's growth potential.

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