Balanced portfolio with a strong focus on US equities and dividends

Report created on Jul 21, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

1/5
Single-Focused
Less diversification More diversification

Positions

This portfolio is predominantly invested in US equities, with a significant allocation to the Vanguard S&P 500 ETF and the Schwab U.S. Dividend Equity ETF, comprising 80% of the portfolio. The remaining 20% is allocated to the Vanguard Total Bond Market Index Fund ETF Shares, offering a balance between stocks and bonds. This composition reflects a single-focused diversification strategy, heavily leaning towards large-cap US stocks and dividends, with minimal exposure to bonds for risk mitigation.

Growth Info

Historically, this portfolio has achieved a Compound Annual Growth Rate (CAGR) of 11.34%, with a maximum drawdown of -28.99%. The days contributing to 90% of the returns number just 31, indicating that the portfolio's performance has been significantly impacted by short-term market movements. This volatility is somewhat mitigated by the portfolio's balanced approach between equities and bonds, yet it underscores the importance of understanding market timing and its effects on long-term investment outcomes.

Projection Info

Monte Carlo simulations, using historical data to project future outcomes, suggest a wide range of potential portfolio values. The 50th percentile outcome indicates a 247.8% increase, while the 5th and 67th percentiles show more conservative and optimistic scenarios, respectively. It's important to note that while Monte Carlo provides a broad spectrum of potential futures, it cannot predict unforeseen market shifts or economic events.

Asset classes Info

  • Stocks
    80%
  • Bonds
    20%

The asset class distribution of 80% stocks and 20% bonds aligns with a balanced investment strategy, designed to provide growth through equities while mitigating risk with bond investments. This allocation is typical for investors with a moderate risk tolerance, seeking both capital appreciation and income. However, the complete absence of alternative asset classes or cash positions may limit the portfolio's flexibility in rapidly changing markets.

Sectors Info

  • Technology
    20%
  • Financials
    10%
  • Health Care
    9%
  • Consumer Staples
    9%
  • Consumer Discretionary
    8%
  • Energy
    8%
  • Industrials
    7%
  • Telecommunications
    6%
  • Basic Materials
    1%
  • Utilities
    1%
  • Real Estate
    1%

Sector allocation is concentrated in technology, financial services, and healthcare, which are historically growth-oriented sectors. However, the portfolio also maintains significant positions in consumer defensive and cyclicals, energy, and industrials, offering a degree of diversification. This sector spread can help buffer against sector-specific downturns, though the heavy tilt towards growth sectors may increase volatility.

Regions Info

  • North America
    80%

With 80% of assets allocated to North America, the portfolio lacks international diversification, which could expose investors to region-specific risks and miss out on potential opportunities in emerging and developed markets outside the US. Expanding geographic exposure could enhance diversification benefits and potentially reduce volatility over the long term.

Market capitalization Info

  • Large-cap
    35%
  • Mega-cap
    23%
  • Mid-cap
    19%
  • Small-cap
    2%

The market capitalization breakdown shows a preference for big and mega-cap stocks, which are typically less volatile than their smaller counterparts. However, the limited exposure to small and micro-cap stocks may restrict potential high-growth opportunities. Adjusting this allocation could enhance returns, albeit with increased risk.

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 current portfolio is positioned near the Efficient Frontier, suggesting it is optimized for the best possible risk-return ratio given its current asset allocation. However, adding non-correlated assets or adjusting the allocation towards international equities could potentially move the portfolio even closer to the frontier, enhancing its efficiency by improving the risk-return profile without necessarily increasing volatility.

Dividends Info

  • Vanguard Total Bond Market Index Fund ETF Shares 3.80%
  • Schwab U.S. Dividend Equity ETF 3.80%
  • Vanguard S&P 500 ETF 1.20%
  • Weighted yield (per year) 2.50%

The dividend yield of the portfolio averages 2.50%, with both the Schwab U.S. Dividend Equity ETF and the Vanguard Total Bond Market Index Fund ETF Shares contributing significantly to this income. This yield is an attractive feature for income-seeking investors, providing a steady cash flow in addition to potential capital appreciation. However, investors should also consider the growth potential of reinvesting dividends versus the immediate income.

Ongoing product costs Info

  • Vanguard Total Bond Market Index Fund ETF Shares 0.03%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.04%

The portfolio's total expense ratio (TER) of 0.04% is impressively low, maximizing the potential for net returns over the long term. Low costs are crucial for long-term investment success, as they compound along with investment returns. This portfolio's cost efficiency is a strong positive feature, supporting better performance relative to more expensive alternatives.

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