Balanced portfolio with strong North American focus and moderate dividend yield
Report created on Jan 13, 2025Risk profile
4/7
Diversification profile
3/5
Positions
-
VT Vanguard Total Stock Market Index Fund ETF Shares
VTI - US9229087690 50.00% -
SC Schwab U.S. Dividend Equity ETF
SCHD - US8085247976 20.00% -
BN Vanguard Total Bond Market Index Fund ETF Shares
BND - US9219378356 10.00% -
JE JPMorgan Nasdaq Equity Premium Income ETF
JEPQ - US46654Q2030 8.00% -
VX Vanguard Total International Stock Index Fund ETF Shares
VXUS - US9219097683 7.00% -
JE JPMorgan Equity Premium Income ETF
JEPI - US46641Q3323 5.00%
The portfolio is composed of a mix of equity and bond ETFs, with a significant 87% allocation to stocks and just under 10% to bonds. This composition is typical for a balanced portfolio, aiming to capture equity growth while maintaining some stability through fixed-income assets. The equity-heavy allocation suggests a focus on growth, albeit with some level of risk due to market volatility. To further balance growth and stability, consider increasing bond exposure. This could enhance portfolio resilience during market downturns, providing a cushion against equity market fluctuations.
Growth
Historically, the portfolio has achieved a commendable Compound Annual Growth Rate (CAGR) of 10.1%, outperforming typical balanced benchmarks. The maximum drawdown of -14.59% indicates reasonable resilience during market declines. This performance suggests a well-constructed portfolio, balancing risk and return effectively. However, it's crucial to remember that past performance doesn't guarantee future results. Continue monitoring performance against benchmarks and adjust allocations to sustain desired growth and risk levels.
Projection
The portfolio's forward projection, based on Monte Carlo simulations, indicates a median growth of 182% with an annualized return of 8.53%. Monte Carlo simulations use historical data to estimate potential future outcomes, but they can't predict exact future results. While the simulations suggest positive returns, the inherent unpredictability of markets means outcomes may vary. Regularly reviewing and rebalancing the portfolio can help align it with evolving market conditions and personal investment goals.
Asset classes
- Stocks 88%
- Bonds 10%
- No data 2%
- Cash 1%
The portfolio's asset allocation is heavily weighted towards stocks at 87%, with bonds at just under 10%. This allocation favors growth potential but may expose the portfolio to higher volatility. Diversifying further into bonds or other asset classes could enhance stability, particularly during market downturns. A more balanced allocation might better align with a moderate risk tolerance, providing a steadier growth path over the long term.
Sectors
- Technology 23%
- Financials 13%
- Health Care 10%
- Consumer Discretionary 10%
- Industrials 9%
- Telecommunications 7%
- Consumer Staples 7%
- Energy 5%
- Basic Materials 2%
- Utilities 2%
- Real Estate 2%
The portfolio is notably concentrated in the technology sector, comprising over 23% of the total allocation. While this sector has been a strong performer, it also introduces volatility, especially during periods of interest rate hikes. The sectoral balance across financial services, healthcare, and consumer cyclicals helps mitigate some risks. Consider diversifying further into less represented sectors like utilities or real estate to reduce reliance on tech and enhance stability.
Regions
- North America 83%
- Europe Developed 3%
- Asia Emerging 1%
- Japan 1%
- Asia Developed 1%
With over 82% of the portfolio focused on North America, geographic diversification is limited. This concentration may expose the portfolio to region-specific risks, like economic downturns or policy changes. Increasing exposure to international markets could enhance diversification and potentially capitalize on growth opportunities outside North America. A more balanced geographic spread can help mitigate risks associated with regional economic fluctuations.
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 appears to be well-positioned on the Efficient Frontier, suggesting a strong balance between risk and return. The Efficient Frontier represents the best possible risk-return ratio for a given set of assets. While the portfolio is optimized for current holdings, further fine-tuning could enhance performance. Consider slight adjustments to asset weights to ensure the portfolio remains on the frontier, maximizing returns for the level of risk taken.
Dividends
- Vanguard Total Bond Market Index Fund ETF Shares 3.70%
- JPMorgan Equity Premium Income ETF 7.40%
- JPMorgan Nasdaq Equity Premium Income ETF 9.70%
- Schwab U.S. Dividend Equity ETF 3.70%
- Vanguard Total Stock Market Index Fund ETF Shares 1.30%
- Vanguard Total International Stock Index Fund ETF Shares 3.40%
- Weighted yield (per year) 3.14%
The portfolio's dividend yield stands at 3.14%, providing a steady income stream alongside capital gains. This yield is supported by holdings like the JPMorgan Nasdaq Equity Premium Income ETF, which offers a high dividend yield. For investors seeking income, maintaining or increasing the allocation to high-yield assets could be beneficial. However, balancing yield with growth potential is crucial to avoid sacrificing long-term capital appreciation.
Ongoing product costs
- Vanguard Total Bond Market Index Fund ETF Shares 0.03%
- JPMorgan Equity Premium Income ETF 0.35%
- JPMorgan Nasdaq Equity Premium Income ETF 0.35%
- Schwab U.S. Dividend Equity ETF 0.06%
- Vanguard Total Stock Market Index Fund ETF Shares 0.03%
- Vanguard Total International Stock Index Fund ETF Shares 0.08%
- Weighted costs total (per year) 0.08%
The portfolio's total expense ratio (TER) is impressively low at 0.08%, indicating cost efficiency. This low cost structure supports better long-term performance by minimizing fees that can erode returns over time. Maintaining this cost efficiency should remain a priority. Regularly reviewing and potentially replacing higher-cost assets with lower-cost alternatives can help sustain this advantage, ensuring more of the portfolio’s returns benefit the investor.
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