Balanced Moderately Diversified Portfolio with Strong Performance and High Correlation Among US-Based ETFs

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 a balanced investor seeking moderate risk with a focus on growth through equities. Ideal for those with a medium to long-term investment horizon, it offers exposure to large-cap US stocks and some international diversification. The investor should be comfortable with market volatility and have a moderate risk tolerance. The portfolio's strong historical performance appeals to those aiming for capital appreciation while accepting the potential for significant drawdowns. A balanced approach aligns with investors looking to grow wealth steadily over time.

Positions

  • Vanguard S&P 500 ETF
    VOO - US9229083632
    50.00%
  • Invesco NASDAQ 100 ETF
    QQQM - US46138G6492
    25.00%
  • Avantis® U.S. Small Cap Value ETF
    AVUV - US0250728773
    15.00%
  • Vanguard Total International Stock Index Fund ETF Shares
    VXUS - US9219097683
    10.00%

The portfolio is composed of four ETFs, with a significant 50% allocation to the Vanguard S&P 500 ETF. The Invesco NASDAQ 100 ETF holds 25%, Avantis U.S. Small Cap Value ETF takes up 15%, and the Vanguard Total International Stock Index Fund ETF Shares rounds it out with 10%. This mix offers exposure primarily to large-cap US stocks, with a moderate focus on small-cap and international equities. The portfolio's composition leans heavily towards US equities, which can provide stability but might limit global growth opportunities. To enhance diversification, consider adding more international or non-US based assets.

Growth Info

Historically, the portfolio has performed remarkably well, with a compound annual growth rate (CAGR) of 16.3%. This growth rate indicates a strong return on a hypothetical initial investment, despite experiencing a maximum drawdown of -25.4%. Such a drawdown highlights the inherent market risks, yet the portfolio's recovery and growth have been impressive. Understanding past performance helps set realistic expectations for future returns. While past performance isn't indicative of future results, maintaining a balanced approach can help manage potential downturns effectively.

Projection Info

The forward projection using a Monte-Carlo simulation, which involves running numerous random scenarios to predict future performance, suggests promising returns. With a hypothetical initial investment, the portfolio's 50th percentile projection is a 673.2% return, while the 67th percentile is even higher at 976.12%. These projections underscore the portfolio's potential for substantial growth. However, it's crucial to remember that these are statistical forecasts and actual results may vary. To mitigate risks, consider maintaining a diversified investment strategy that aligns with your long-term goals.

Asset classes Info

  • Stocks
    100%
  • Cash
    0%
  • Other
    0%
  • No data
    0%

The portfolio is almost entirely invested in stocks, with a minuscule allocation to cash and other asset classes. This heavy stock allocation reflects a higher risk profile, which could lead to significant volatility. Stocks typically offer higher returns over the long term, but they also come with greater risk. To balance risk, consider incorporating more fixed-income securities or alternative investments. Diversifying across asset classes can help stabilize returns and provide a cushion during market downturns, aligning with a balanced investment strategy.

Sectors Info

  • Technology
    32%
  • Financials
    13%
  • Consumer Discretionary
    12%
  • Telecommunications
    9%
  • Industrials
    9%
  • Health Care
    8%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    2%

Sector allocation reveals a strong emphasis on technology, accounting for over 31% of the portfolio. Other significant sectors include financial services, consumer cyclicals, and communication services. While these sectors have driven past growth, overexposure can lead to heightened risk if any single sector underperforms. A well-diversified portfolio spreads investments across various sectors to mitigate risk and capture growth opportunities across the market. Consider rebalancing to ensure a more even distribution across sectors, reducing reliance on the performance of specific industries.

Regions Info

  • North America
    90%
  • Europe Developed
    5%
  • Asia Emerging
    2%
  • Japan
    2%
  • Asia Developed
    1%
  • Latin America
    1%
  • Australasia
    1%
  • Africa/Middle East
    0%
  • Europe Emerging
    0%

The portfolio's geographic composition is heavily weighted towards North America, with 89.5% of assets in the region. This concentration might limit exposure to international markets, which can offer diverse growth opportunities. While US markets have historically been strong, diversifying geographically can help manage risk and tap into emerging markets' potential. To achieve a more balanced global exposure, consider increasing allocations to regions like Europe, Asia, and other emerging markets. This approach can enhance resilience against regional economic fluctuations.

Redundant positions Info

  • Invesco NASDAQ 100 ETF
    Vanguard S&P 500 ETF
    High correlation

The portfolio shows high correlation between the Invesco NASDAQ 100 ETF and the Vanguard S&P 500 ETF. High correlation means these assets tend to move in the same direction, which can amplify risk during market downturns. Diversifying with assets that have low or negative correlations can help reduce overall portfolio volatility. While it's challenging to eliminate correlation entirely, aiming for a mix of assets that don't all react similarly to market changes can provide a smoother investment experience. Explore options to diversify correlations for a more balanced risk profile.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Invesco NASDAQ 100 ETF 0.60%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.00%
  • Weighted yield (per year) 1.28%

The portfolio's dividend yield is 1.28%, with the Vanguard Total International Stock Index Fund ETF Shares offering the highest yield at 3.0%. Dividends provide a steady income stream, which can be reinvested for compounding growth. A balanced approach to dividend and growth-oriented investments can enhance total returns. While the current yield is modest, focusing on dividend growth and stability can be beneficial. Consider maintaining a mix of dividend-paying and growth-oriented assets to capture both income and capital appreciation.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Invesco NASDAQ 100 ETF 0.15%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.10%

Portfolio costs are relatively low, with an overall total expense ratio (TER) of 0.1%. This low-cost structure is advantageous as it maximizes net returns by minimizing fees. High fees can eat into investment gains over time, so keeping costs low is crucial for long-term success. While the current cost structure is efficient, regularly reviewing and comparing fees with other investment options can ensure continued cost-effectiveness. Maintaining a focus on low-cost investments aligns with sound investment principles and enhances overall portfolio performance.

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.

Portfolio optimization suggests that the current allocation may not be on the efficient frontier due to high correlation between assets. The efficient frontier represents the set of optimal portfolios offering the highest expected return for a defined level of risk. With overlapping ETFs, the portfolio may not be fully optimized. To potentially improve efficiency, consider reducing correlations by diversifying across different asset classes or regions. This approach can help achieve a more optimal risk-return balance, enhancing the portfolio's overall performance and resilience.

What next?

Ready to invest in this portfolio?

Select a broker that fits your needs and watch for low fees to maximize your returns.

Select broker

Create your own report?

Analyze your portfolio

Join our community!

Join Discord

The information provided on this platform is for informational purposes only and should not be considered as financial or investment advice. Insightfolio does not provide investment advice, personalized recommendations, or guidance regarding the purchase, holding, or sale of financial assets. The tools and content are intended for educational purposes only and are not tailored to individual circumstances, financial needs, or objectives.

Insightfolio assumes no liability for the accuracy, completeness, or reliability of the information presented. Users are solely responsible for verifying the information and making independent decisions based on their own research and careful consideration. Use of the platform should not replace consultation with qualified financial professionals.

Investments involve risks. Users should be aware that the value of investments may fluctuate and that past performance is not an indicator of future results. Investment decisions should be based on personal financial goals, risk tolerance, and independent evaluation of relevant information.

Insightfolio does not endorse or guarantee the suitability of any particular financial product, security, or strategy. Any projections, forecasts, or hypothetical scenarios presented on the platform are for illustrative purposes only and are not guarantees of future outcomes.

By accessing the services, information, or content offered by Insightfolio, users acknowledge and agree to these terms of the disclaimer. If you do not agree to these terms, please do not use our platform.