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A balanced portfolio with strong US focus and potential for steady growth and income

Report created on Dec 10, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

This portfolio is composed primarily of ETFs, with a heavy emphasis on the Vanguard S&P 500 ETF, accounting for 50% of the allocation. The remaining 50% is diversified across small cap, mid cap, international, and emerging markets value ETFs. This structure aims to balance growth potential with risk management. A significant portion is invested in large-cap US equities, which are often seen as stable and reliable. The inclusion of small cap and international ETFs adds diversification, potentially enhancing returns while spreading risk. To optimize this composition, consider periodically rebalancing the portfolio to maintain target allocations and adapt to changing market conditions.

Growth Info

Historically, the portfolio has delivered a strong compound annual growth rate (CAGR) of 12.4%, indicating robust performance. The maximum drawdown of -23.44% highlights the potential risks during market downturns. This performance suggests that the portfolio has been resilient, recovering well from market dips. Understanding past performance helps set realistic expectations, though it's crucial to remember that past results don't guarantee future returns. To manage potential downturns, consider maintaining a cash reserve or diversifying further into less correlated assets. Regularly reviewing performance metrics can help stay informed about the portfolio's health.

Projection Info

Forward projections using Monte Carlo simulations provide a range of potential outcomes based on historical data. With 1,000 simulations, the portfolio shows a median expected return of 268.19% and an annualized return of 11.45%. While promising, these projections should be interpreted cautiously, as they rely on past data and assume future market conditions will be similar. This uncertainty underscores the importance of diversification and risk management. To prepare for various scenarios, consider stress-testing the portfolio against different market conditions and adjusting allocations as needed to align with your risk tolerance and goals.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted in equities, with 99.8% allocated to stocks, a minimal portion in cash, and an insignificant bond allocation. This equity dominance suggests a focus on growth, suitable for investors with a higher risk tolerance. However, this lack of fixed-income exposure could lead to increased volatility. Diversifying into bonds or other asset classes may reduce risk and provide more stability during market fluctuations. Regularly reassessing asset class allocations can ensure they align with evolving financial goals and risk preferences, potentially enhancing long-term performance.

Sectors Info

  • Technology
    21%
  • Financials
    17%
  • Industrials
    15%
  • Consumer Discretionary
    12%
  • Health Care
    8%
  • Energy
    6%
  • Basic Materials
    6%
  • Telecommunications
    5%
  • Consumer Staples
    5%
  • Utilities
    2%
  • Real Estate
    2%

Sector allocation is diversified, with significant exposure to technology, financial services, and industrials. These sectors collectively represent over half of the portfolio, indicating a strong focus on growth-oriented industries. While this can drive returns, it also introduces sector-specific risks. A downturn in any of these sectors could impact overall performance. To mitigate this risk, consider diversifying further into underrepresented sectors like utilities or real estate. This strategy may provide stability and reduce sensitivity to sector-specific downturns, enhancing the portfolio's resilience over time.

Regions Info

  • North America
    80%
  • Asia Emerging
    5%
  • Europe Developed
    5%
  • Asia Developed
    4%
  • Japan
    3%
  • Latin America
    1%
  • Australasia
    1%
  • Africa/Middle East
    1%

The portfolio's geographic allocation is heavily skewed towards North America, comprising over 80% of the total. This concentration reflects a strong focus on the US market, which may benefit from its stability and growth potential. However, it also exposes the portfolio to regional risks, such as economic downturns or policy changes. Investing more in emerging markets or other international regions could enhance diversification and capture global growth opportunities. Regularly reviewing geographic allocations can help maintain a balanced exposure to different economic environments.

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.

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The portfolio can be optimized using the Efficient Frontier, which seeks the best risk-return ratio based on current assets. This involves adjusting allocations to achieve a balance where expected returns are maximized for a given level of risk. While this optimization focuses on efficiency, it doesn't necessarily address diversification or specific investment goals. To enhance portfolio efficiency, regularly review asset allocations and consider incorporating assets with favorable risk-return profiles. This approach can help achieve optimal performance while aligning with individual risk tolerance and investment objectives.

Dividends Info

  • Avantis® International Small Cap Value ETF 3.00%
  • Avantis® Emerging Markets Value ETF 3.60%
  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Vanguard S&P 500 ETF 1.20%
  • Invesco S&P MidCap Quality ETF 4.70%
  • Weighted yield (per year) 2.19%

The portfolio offers a total dividend yield of 2.19%, with notable contributions from the Invesco S&P MidCap Quality ETF at 4.7%. Dividends provide a steady income stream, enhancing total returns and offering a cushion during market downturns. Reinvesting dividends can compound growth over time, boosting portfolio value. To maximize income potential, consider increasing exposure to high-dividend-paying assets, while ensuring they align with overall investment goals. Regularly reviewing dividend yields and payout ratios can help maintain a healthy balance between growth and income.

Ongoing product costs Info

  • Avantis® International Small Cap Value ETF 0.36%
  • Avantis® Emerging Markets Value ETF 0.36%
  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Vanguard S&P 500 ETF 0.03%
  • Invesco S&P MidCap Quality ETF 0.25%
  • Weighted costs total (per year) 0.16%

The portfolio's total expense ratio (TER) is 0.16%, which is relatively low and favorable for long-term growth. Lower costs mean more of your investment returns are retained, enhancing compounding effects over time. It's important to monitor expense ratios, as high fees can erode returns significantly. To further reduce costs, consider exploring lower-cost alternatives or negotiating fees with your financial advisor. Keeping expenses in check is a crucial aspect of optimizing portfolio performance, ensuring more of your money works for you.

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