A balanced portfolio with a strong emphasis on technology and energy sectors

Report created on Dec 14, 2024

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 heavily weighted towards equities, with a 78% allocation, while bonds make up around 20%. The focus is mainly on large-cap U.S. stocks, as evidenced by the significant allocation to the Vanguard S&P 500 ETF. An interesting aspect is the inclusion of technology and energy-focused ETFs, which together account for a substantial portion of the portfolio. This composition suggests a strategy aimed at capturing growth opportunities while maintaining some stability through bond exposure. To enhance diversification, consider adding assets from different sectors or regions to mitigate sector-specific risks.

Growth Info

Historically, the portfolio has shown strong performance, with a compound annual growth rate (CAGR) of 15.11%. However, it also experienced a maximum drawdown of 17.4%, indicating periods of significant volatility. Understanding past performance helps set realistic expectations, but it's crucial to remember that past results don't guarantee future returns. The portfolio's ability to recover from drawdowns suggests resilience, but one must be prepared for potential fluctuations. To manage volatility, consider a more diversified approach or adding defensive assets to balance growth with stability.

Projection Info

The portfolio's forward projection, based on Monte Carlo simulations, indicates a wide range of potential outcomes. With 1,000 simulations, the median scenario projects a 747.82% increase, while the worst-case scenario still shows a positive return of 95.36%. Monte Carlo simulations use historical data to model future performance, but they cannot predict exact outcomes. This variability underscores the importance of maintaining a balanced approach to risk management. To navigate uncertainty, regularly review and adjust your asset allocation in response to changing market conditions and personal financial goals.

Asset classes Info

  • Stocks
    78%
  • Bonds
    20%
  • No data
    2%

The allocation across asset classes is predominantly in stocks, with a smaller portion in bonds. This mix suggests a growth-oriented strategy, leveraging the higher potential returns of equities while using bonds to provide some stability and income. Over-reliance on equities can increase volatility, so it's vital to assess whether the current bond allocation aligns with your risk tolerance and financial objectives. To enhance portfolio resilience, consider diversifying into other asset classes, such as real estate or commodities, which may offer different risk-return profiles.

Sectors Info

  • Technology
    36%
  • Energy
    21%
  • Telecommunications
    6%
  • Consumer Discretionary
    4%
  • Health Care
    3%
  • Financials
    3%
  • Industrials
    2%
  • Consumer Staples
    2%
  • Utilities
    1%
  • Basic Materials
    1%
  • Real Estate
    1%

The portfolio is notably concentrated in the technology and energy sectors, which together comprise over 57% of the total allocation. This concentration can lead to higher volatility, particularly if these sectors face downturns. Sector diversification is crucial for reducing risk, as it helps mitigate the impact of sector-specific events on overall performance. To achieve a more balanced sector allocation, consider increasing exposure to underrepresented sectors like consumer defensive or utilities, which may provide stability during market turbulence.

Regions Info

  • North America
    79%
  • Asia Developed
    1%
  • Europe Developed
    1%

Geographically, the portfolio is heavily weighted towards North America, with over 78% exposure. This concentration can limit the benefits of international diversification, such as reduced volatility and exposure to different economic cycles. Geographic diversification is essential for spreading risk across various markets and capturing growth opportunities globally. To enhance geographic diversification, consider increasing allocations to developed and emerging markets outside of North America, which can offer different growth dynamics and risk profiles.

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 can potentially be optimized using the Efficient Frontier, which seeks the best possible risk-return ratio for a given level of risk. This involves adjusting the allocation among existing assets to achieve a more efficient portfolio. Optimization does not guarantee diversification or other specific goals but focuses on maximizing returns for a given level of risk. Regularly reassessing the portfolio's efficiency and making necessary adjustments can help ensure alignment with your risk tolerance and financial objectives.

Dividends Info

  • VanEck Energy Income ETF 3.30%
  • iShares U.S. Technology ETF 0.40%
  • JPMorgan Nasdaq Equity Premium Income ETF 9.30%
  • VanEck Semiconductor ETF 0.40%
  • iShares 20+ Year Treasury Bond ETF 3.80%
  • Vanguard S&P 500 ETF 1.20%
  • Weighted yield (per year) 2.75%

The portfolio's dividend yield stands at 2.75%, with significant contributions from the JPMorgan Nasdaq Equity Premium Income ETF and VanEck Energy Income ETF. Dividends provide a steady income stream and can enhance total returns, particularly in volatile markets. While dividends are a valuable component, it's important not to prioritize them at the expense of growth potential. To balance income and growth, consider maintaining a mix of high-yield and growth-oriented assets, ensuring the portfolio aligns with your income needs and long-term objectives.

Ongoing product costs Info

  • VanEck Energy Income ETF 0.46%
  • iShares U.S. Technology ETF 0.40%
  • JPMorgan Nasdaq Equity Premium Income ETF 0.35%
  • VanEck Semiconductor ETF 0.35%
  • iShares 20+ Year Treasury Bond ETF 0.15%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.26%

The portfolio's total expense ratio (TER) is 0.26%, with the Vanguard S&P 500 ETF having the lowest cost at 0.03%. While costs may seem minor, they compound over time and can significantly impact long-term returns. Lowering expenses is an effective way to enhance net returns without altering the risk profile. Regularly review the cost structure and explore lower-cost alternatives if available, ensuring that any changes align with your investment strategy and objectives. Prioritizing cost efficiency can lead to better outcomes over the investment horizon.

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