A balanced portfolio with strong US focus and moderate sector diversification

Report created on Dec 13, 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 primarily consists of ETFs, with a significant 75% allocation to the Vanguard S&P 500 ETF. It also includes smaller allocations to other ETFs and a single common stock. The heavy weighting in the S&P 500 ETF indicates a strong emphasis on large-cap US equities. Such a composition is typical for investors seeking broad market exposure with a tilt towards stability. While ETFs provide diversification benefits, the portfolio's concentration in a single ETF could limit exposure to other potentially rewarding asset classes. Consider incrementally diversifying into different asset classes or sectors to enhance overall portfolio resilience.

Growth Info

The portfolio has demonstrated a commendable historical performance with a compound annual growth rate (CAGR) of 16.08%. This indicates that over time, the portfolio has grown substantially, outpacing inflation and many traditional savings vehicles. However, history is not a guaranteed predictor of future performance. The maximum drawdown of -24.33% highlights potential risks during market downturns. Investors should be prepared for periods of volatility and consider strategies such as dollar-cost averaging to mitigate the impact of market fluctuations.

Projection Info

Using Monte Carlo simulations, the portfolio's potential future performance was analyzed. This method uses historical data to model a wide range of possible outcomes, providing insights into potential future returns and risks. With a 50th percentile projection of 851.44% growth, the portfolio shows promising potential. However, the reliance on historical data means projections may not account for unprecedented market events. Investors should use these projections as a guide rather than a guarantee, maintaining flexibility to adapt to changing market conditions.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted towards stocks, with nearly 100% allocation. This indicates a focus on growth, as equities typically offer higher returns over the long term compared to other asset classes like bonds or cash. While this can be beneficial for capital appreciation, it also increases exposure to market volatility. Investors might consider incorporating other asset classes to balance risk and return, potentially adding fixed income or alternative investments to achieve greater diversification and reduce overall portfolio risk.

Sectors Info

  • Technology
    28%
  • Financials
    15%
  • Consumer Discretionary
    11%
  • Telecommunications
    10%
  • Health Care
    10%
  • Industrials
    9%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    2%

Sector allocation reveals a significant concentration in technology, accounting for over 28% of the portfolio. This sector has been a major driver of growth in recent years, but it also comes with heightened volatility. Diversifying across other sectors like healthcare, consumer cyclicals, and financial services can help mitigate sector-specific risks. By spreading investments across various sectors, investors can better withstand market fluctuations and benefit from growth in multiple areas of the economy.

Regions Info

  • North America
    90%
  • Europe Developed
    4%
  • Asia Emerging
    2%
  • Japan
    2%
  • Asia Developed
    1%
  • Australasia
    1%

The portfolio's geographic allocation is predominantly in North America, with over 90% exposure. This reflects a strong home bias, which can limit the benefits of global diversification. While the US market has shown robust performance, diversifying into international markets can provide exposure to different economic cycles and growth opportunities. Consider gradually increasing allocations to developed and emerging markets outside North America to enhance diversification and potentially capture higher returns.

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 possible risk-return ratio. By adjusting the allocation among existing assets, investors can potentially enhance returns without increasing risk. This involves analyzing historical performance and correlation to identify an optimal mix. However, it's important to note that optimization doesn't guarantee higher returns, as it relies on past data and assumptions. Regularly revisiting the portfolio's allocation and adjusting as needed can help maintain efficiency.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Alphabet Inc Class C 0.20%
  • 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) 1.37%

The portfolio's dividend yield is 1.37%, with the Vanguard Total International Stock Index Fund ETF Shares contributing the highest yield at 3.0%. Dividends can provide a steady income stream, particularly during market downturns when capital gains may be limited. While the current yield is modest, reinvesting dividends can enhance compounding returns over time. Investors seeking higher income might explore dividend-focused ETFs or stocks to potentially increase the yield.

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) 0.06%

The portfolio's total expense ratio (TER) is 0.06%, reflecting low investment costs. Keeping costs minimal is crucial for maximizing net returns, as fees can significantly erode gains over time. The majority of the portfolio is invested in low-cost Vanguard ETFs, which are known for their affordability. Regularly reviewing and comparing expense ratios can ensure cost efficiency. Investors might also explore commission-free trading platforms to further reduce expenses.

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