A balanced growth-focused portfolio with a strong emphasis on U.S. equities and technology

Report created on Dec 24, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

This portfolio consists mainly of ETFs and a single common stock, with a significant focus on U.S. equities. The Schwab U.S. Large-Cap Growth ETF and Vanguard Total Stock Market Index Fund ETF each hold 20% of the portfolio, while other assets like the JPMorgan and VanEck ETFs contribute smaller portions. This structure leans towards growth and income, aligning with a balanced risk profile. Compared to typical balanced portfolios, this one has a heavier tilt towards growth equities, which may offer higher returns but with increased volatility.

Growth Info

Historically, the portfolio has shown a strong CAGR of 14.36%, indicating robust growth over time. The maximum drawdown of -16.6% suggests a moderate level of risk, typical for a balanced portfolio. Despite occasional downturns, the portfolio has consistently recovered, making it resilient in various market conditions. Compared to benchmarks, this performance is commendable and suggests a well-managed allocation. However, it's crucial to remember that past performance doesn't guarantee future results, so continuous monitoring is essential.

Projection Info

Monte Carlo simulations, which use historical data to predict future outcomes, suggest a promising outlook for the portfolio. With 1,000 simulations, the median (50th percentile) end value is projected to be 426.2%, and 987 simulations resulted in positive returns. This indicates a high probability of achieving satisfactory returns. However, the 5th percentile shows a potential downside of 51.9%, highlighting inherent risks. While these projections are helpful, they rely on past data and should be interpreted with caution as actual future market conditions may differ.

Asset classes Info

  • Stocks
    97%
  • No data
    3%
  • Cash
    1%

The portfolio is heavily weighted towards stocks, comprising over 96% of the total allocation. This concentration in equities aligns with a growth-focused strategy but may increase exposure to market volatility. Compared to typical balanced portfolios, which might include more bonds or alternative assets, this allocation is more aggressive. To enhance diversification, consider incorporating other asset classes, such as bonds or real estate, which can provide stability and reduce overall risk during market fluctuations.

Sectors Info

  • Technology
    35%
  • Health Care
    19%
  • Consumer Discretionary
    10%
  • Financials
    10%
  • Telecommunications
    7%
  • Industrials
    7%
  • Consumer Staples
    5%
  • Energy
    3%
  • Basic Materials
    2%
  • Utilities
    2%
  • Real Estate
    1%

The portfolio's sector allocation is dominated by technology, making up 35% of the total. This tech-heavy focus can lead to higher volatility, especially during periods of interest rate hikes or regulatory changes. Healthcare and consumer cyclicals are also significant, providing some balance. Compared to benchmarks, this sector allocation is more concentrated, which might limit diversification benefits. To mitigate sector-specific risks, consider redistributing some assets towards underrepresented sectors like utilities or real estate for a more balanced approach.

Regions Info

  • North America
    88%
  • Europe Developed
    5%
  • Asia Developed
    3%
  • Asia Emerging
    2%
  • Japan
    2%
  • Australasia
    1%

With 88% of assets in North America, the portfolio has a strong geographic concentration in the U.S. This focus can benefit from the stability of the U.S. market but might miss out on growth opportunities in other regions. Compared to global benchmarks, this allocation is less diversified. To enhance geographic diversification, consider increasing exposure to emerging markets or Europe, which can provide growth potential and reduce reliance on the U.S. economy. This adjustment can help manage risks associated with regional economic downturns.

Redundant positions Info

  • JPMorgan Nasdaq Equity Premium Income ETF
    Schwab U.S. Large-Cap Growth ETF
    Vanguard Total Stock Market Index Fund ETF Shares
    High correlation

The portfolio contains highly correlated assets, particularly among the JPMorgan Nasdaq ETF, Schwab U.S. Large-Cap Growth ETF, and Vanguard Total Stock Market Index Fund ETF. High correlation means these assets tend to move together, which can limit diversification benefits during market downturns. To improve diversification, consider reducing overlap by replacing one or more of these ETFs with assets that have lower correlation. This strategy can help manage risk and 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.

Click on the colored dots to explore allocations.

The portfolio could benefit from optimization using the Efficient Frontier, which seeks the best risk-return ratio based on current assets. However, before optimizing, it's crucial to address the high correlation among certain assets to enhance diversification. By reallocating assets to reduce overlap, the portfolio can achieve a more efficient balance between risk and return. Remember, efficiency here refers to maximizing returns for a given risk level, not necessarily increasing diversification or achieving other specific goals.

Dividends Info

  • JPMorgan Equity Premium Income ETF 7.30%
  • JPMorgan Nasdaq Equity Premium Income ETF 9.30%
  • Johnson & Johnson 3.40%
  • Schwab U.S. Dividend Equity ETF 3.60%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.90%
  • Vanguard Total International Stock Index Fund ETF Shares 1.70%
  • Weighted yield (per year) 2.79%

The portfolio offers a respectable dividend yield of 2.79%, with significant contributions from the JPMorgan Equity Premium Income ETFs and Schwab U.S. Dividend Equity ETF. Dividends provide a steady income stream, which can be particularly beneficial for investors seeking regular cash flow. Compared to growth-focused portfolios, this yield is relatively high, offering additional returns beyond capital appreciation. To maintain or increase yield, consider reinvesting dividends or adding high-dividend stocks, which can enhance long-term growth through compounding.

Ongoing product costs Info

  • JPMorgan Equity Premium Income ETF 0.35%
  • JPMorgan Nasdaq Equity Premium Income ETF 0.35%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • VanEck Semiconductor ETF 0.35%
  • 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) 0.13%

The portfolio's total expense ratio (TER) is 0.13%, which is impressively low and supports better long-term performance by minimizing costs. Most ETFs in the portfolio have competitive fees, with Vanguard and Schwab offerings being the most cost-effective. High fees can erode returns over time, so maintaining a low-cost structure is beneficial. To further optimize costs, regularly review the expense ratios and consider switching to lower-cost alternatives if available. This approach ensures that more of your investment returns are retained.

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