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Balanced portfolio with strong dividend focus and moderate emerging market exposure

Report created on Jan 10, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification
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Positions

The portfolio consists of a mix of ETFs, with a significant allocation towards large-cap value and dividend-focused funds. The Vanguard Mega Cap Value Index Fund ETF Shares holds the largest portion at 40%, indicating a strong preference for stable, mature companies. This composition is common for balanced portfolios seeking steady growth. It's important to consider if the current allocations align with your risk tolerance and investment goals. Adjustments could be made to enhance diversification or increase exposure to other asset classes if desired.

Growth Info

Historically, this portfolio has delivered a CAGR of 9.78%, which is impressive for a balanced profile. However, it has also experienced a maximum drawdown of -32.94%, highlighting its vulnerability during market downturns. This underscores the importance of diversification to mitigate risk. Comparing this performance to a benchmark can help understand its relative success. Consider strategies to reduce drawdowns, such as diversifying further across asset classes or regions to balance performance during volatile periods.

Projection Info

Using Monte Carlo simulations, which project future outcomes based on historical data, the portfolio shows potential for substantial growth. With a median projection of 228.83% and a 67th percentile of 322.95%, the outlook is optimistic. However, these simulations rely on past data, which may not predict future market conditions. It's crucial to stay informed about market changes and adjust your portfolio accordingly. Regularly reviewing and rebalancing your portfolio can help maintain alignment with your investment goals.

Asset classes Info

  • Stocks
    89%
  • Cash
    11%

The portfolio is heavily weighted in stocks at 89.37%, with a small allocation to cash. This leans towards a growth-oriented strategy, benefiting from potential equity market gains. However, it may lack the stability that bonds or other fixed-income assets could provide. Diversifying across more asset classes could enhance risk management and provide income stability. Consider adding bonds or alternative investments to reduce volatility and potentially improve risk-adjusted returns.

Sectors Info

  • Financials
    19%
  • Industrials
    15%
  • Technology
    13%
  • Health Care
    13%
  • Consumer Staples
    9%
  • Consumer Discretionary
    6%
  • Energy
    6%
  • Telecommunications
    3%
  • Utilities
    3%
  • Basic Materials
    2%
  • Real Estate
    1%

Sector allocation is diverse, with significant exposure to financial services, industrials, and technology. This aligns well with benchmarks, indicating a balanced approach. However, the high concentration in these sectors may increase volatility if they underperform. Monitoring sector trends and adjusting allocations can help mitigate risks. Consider increasing exposure to underrepresented sectors for greater diversification, which may buffer against sector-specific downturns and enhance overall portfolio stability.

Regions Info

  • North America
    75%
  • Asia Emerging
    9%
  • Asia Developed
    3%
  • Africa/Middle East
    2%
  • Latin America
    1%
  • Europe Developed
    1%

The portfolio's geographic exposure is predominantly North American at 74.57%, with limited diversification across other regions. This concentration may expose the portfolio to regional economic risks. Expanding international exposure could provide diversification benefits and reduce reliance on North American markets. Consider increasing allocations in emerging markets or other developed regions to capture growth opportunities and hedge against regional downturns.

Redundant positions Info

  • Schwab U.S. Dividend Equity ETF
    Vanguard Dividend Appreciation Index Fund ETF Shares
    Vanguard Mega Cap Value Index Fund ETF Shares
    iShares Core Dividend Growth ETF
    High correlation

Highly correlated assets in the portfolio, particularly among dividend-focused ETFs, may limit diversification benefits. Correlation measures how assets move in relation to each other; high correlation can mean that assets perform similarly, reducing the portfolio's ability to weather market changes. Consider reducing overlap by replacing similar funds with those offering different exposures or strategies. This can enhance diversification, potentially improving the portfolio's resilience during market 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.

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The portfolio could benefit from optimization using the Efficient Frontier, which helps find the best possible risk-return trade-off. Currently, the portfolio has overlapping assets that provide no additional diversification benefits. By adjusting allocations, you can potentially achieve a more efficient portfolio. This involves reallocating existing assets to maximize returns for a given level of risk, rather than seeking new investments. Regularly reviewing your portfolio's efficiency can ensure it remains aligned with your risk tolerance and goals.

Dividends Info

  • SPDR® Bloomberg 1-3 Month T-Bill ETF 5.00%
  • iShares Core Dividend Growth ETF 2.30%
  • iShares U.S. Aerospace & Defense ETF 0.50%
  • Vanguard Mega Cap Value Index Fund ETF Shares 2.30%
  • Schwab U.S. Dividend Equity ETF 3.70%
  • Vanguard Dividend Appreciation Index Fund ETF Shares 1.70%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 3.30%
  • Weighted yield (per year) 2.71%

The portfolio's total dividend yield stands at 2.71%, providing a steady income stream. Dividend-focused ETFs like Schwab U.S. Dividend Equity ETF and Vanguard Dividend Appreciation Index Fund contribute significantly to this yield. Dividends can be a reliable income source, especially during market volatility. Ensure that the dividend yield aligns with your income needs and reinvestment strategy. Regularly reviewing dividend policies and yields can help optimize income generation and growth potential.

Ongoing product costs Info

  • SPDR® Bloomberg 1-3 Month T-Bill ETF 0.14%
  • iShares Core Dividend Growth ETF 0.08%
  • iShares U.S. Aerospace & Defense ETF 0.40%
  • Vanguard Mega Cap Value Index Fund ETF Shares 0.07%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Vanguard Dividend Appreciation Index Fund ETF Shares 0.06%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.09%

The portfolio's total expense ratio (TER) is low at 0.09%, which is beneficial for long-term performance. Lower costs mean more of your returns stay in your pocket, enhancing compounding effects over time. The cost efficiency of this portfolio is commendable and aligns with best practices for minimizing fees. Continue to monitor expense ratios and consider replacing higher-cost funds with cheaper alternatives if they become available, ensuring cost efficiency remains a priority.

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