Balanced portfolio with solid growth potential but limited geographic diversification

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 an investor seeking balanced growth with moderate risk tolerance and a long-term horizon. It prioritizes steady returns through a focus on U.S. equities, making it ideal for individuals looking to build wealth over time. The emphasis on dividends provides a reliable income stream, which is beneficial for those nearing retirement or seeking passive income. However, the investor should be comfortable with potential market volatility due to the high equity exposure.

Positions

  • Vanguard S&P 500 ETF
    VOO - US9229083632
    45.00%
  • Schwab U.S. Dividend Equity ETF
    SCHD - US8085247976
    35.00%
  • Schwab U.S. Large-Cap Growth ETF
    SCHG - US8085243009
    10.00%
  • Vanguard Information Technology Index Fund ETF Shares
    VGT - US92204A7028
    10.00%

The portfolio is heavily weighted towards ETFs, with a significant 45% allocation to the Vanguard S&P 500 ETF. This allocation is typical for balanced portfolios, providing broad exposure to the U.S. market. However, the high concentration in a single asset type suggests limited diversification, which could expose the portfolio to sector-specific risks. To align more closely with diversified benchmarks, consider incorporating a mix of asset classes, such as bonds or international equities, to enhance stability and reduce risk.

Growth Info

Historically, the portfolio has performed well, achieving a compound annual growth rate (CAGR) of 14.58%. This indicates strong historical returns, likely driven by the robust performance of U.S. equities. However, past performance is not a guarantee of future results. Comparing this to a benchmark like the S&P 500, which has a similar composition, the portfolio's performance is commendable. To maintain strong returns, it’s important to periodically review and adjust allocations based on market conditions.

Projection Info

The forward projection using Monte Carlo simulations suggests a promising outlook, with a median growth of 696.75% and a high probability of positive returns. Monte Carlo analysis uses historical data to estimate potential future outcomes, providing a range of possibilities. While these projections are optimistic, they rely on past data and cannot predict future market conditions with certainty. Regularly reviewing projections and adjusting for changing economic climates can help in maintaining a robust strategy.

Asset classes Info

  • Stocks
    100%
  • Cash
    0%

The portfolio is almost entirely composed of stocks, with a minor cash position. This high equity exposure can lead to significant growth potential but also increases vulnerability to market volatility. A more balanced allocation across asset classes, including fixed income or alternative investments, could provide a buffer against downturns. This alignment would improve the portfolio's resilience and align it more closely with diversified benchmarks, which typically include multiple asset classes.

Sectors Info

  • Technology
    33%
  • Financials
    14%
  • Health Care
    11%
  • Consumer Discretionary
    10%
  • Industrials
    8%
  • Consumer Staples
    7%
  • Telecommunications
    7%
  • Energy
    6%
  • Basic Materials
    2%
  • Utilities
    1%
  • Real Estate
    1%

Sector allocation is heavily skewed towards technology, which comprises over 33% of the portfolio. While tech has been a strong performer, such concentration can lead to increased volatility, especially during market corrections or interest rate hikes. To mitigate sector-specific risks, consider diversifying into underrepresented sectors like utilities or real estate, which could provide more stability during economic fluctuations. This adjustment could enhance the portfolio's resilience against sector-specific downturns.

Regions Info

  • North America
    99%
  • Europe Developed
    1%
  • Asia Developed
    0%
  • Latin America
    0%
  • Africa/Middle East
    0%

The portfolio has a strong focus on North America, with over 99% exposure. This lack of geographic diversification can increase vulnerability to regional economic downturns or policy changes. To mitigate this risk, consider increasing exposure to international markets, which could provide a more balanced global perspective. This could be achieved by incorporating ETFs that track emerging markets or developed economies outside North America, aligning more closely with global benchmarks.

Redundant positions Info

  • Vanguard Information Technology Index Fund ETF Shares
    Schwab U.S. Large-Cap Growth ETF
    Vanguard S&P 500 ETF
    High correlation

The portfolio contains highly correlated assets, particularly among the ETFs focused on large-cap growth and technology. High correlation means these assets tend to move in the same direction, reducing diversification benefits. In market downturns, this can lead to increased risk. To enhance diversification, consider reallocating some investments into less correlated assets, such as bonds or international equities, which may not react similarly to market changes, thereby improving overall portfolio stability.

Dividends Info

  • Schwab U.S. Dividend Equity ETF 3.60%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Vanguard Information Technology Index Fund ETF Shares 0.60%
  • Vanguard S&P 500 ETF 1.20%
  • Weighted yield (per year) 1.90%

The portfolio has a moderate dividend yield of 1.9%, primarily driven by the Schwab U.S. Dividend Equity ETF. Dividend income can provide a stable cash flow, beneficial for reinvestment or income during retirement. For those seeking higher income, consider increasing holdings in dividend-focused assets. However, balancing growth and income is crucial, as high-yield assets may not offer the same growth potential as lower-yielding, growth-oriented investments.

Ongoing product costs Info

  • Schwab U.S. Dividend Equity ETF 0.06%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Vanguard Information Technology Index Fund ETF Shares 0.10%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.05%

The portfolio benefits from impressively low costs, with a total expense ratio (TER) of 0.05%. Low costs are advantageous as they enhance net returns over time, particularly in long-term investment horizons. Maintaining a focus on cost-effective investments is crucial for optimizing returns. However, ensure that low costs do not compromise diversification or quality. Periodically reviewing available ETFs for lower-cost alternatives can further improve cost efficiency.

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.

The portfolio could potentially be optimized using the Efficient Frontier, which helps achieve the best possible risk-return balance. The current asset mix can be adjusted to enhance efficiency, focusing on reducing correlations and increasing diversification. This involves reallocating assets to achieve a more balanced risk profile, which could lead to better returns without increasing risk. Remember, optimization relies on current assets, and any changes should consider long-term goals and risk tolerance.

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.