Balanced portfolio with strong US focus and moderate dividend yield

Report created on Dec 8, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

1/5
Single-Focused
Less diversification More diversification

Positions

The portfolio is composed of a mix of ETFs and individual stocks, with a significant portion allocated to the Vanguard S&P 500 ETF (40.22%). This ETF provides broad exposure to large-cap U.S. equities. The second-largest holding is Brixmor Property, a common stock, making up 21.74%, followed by the Schwab U.S. Dividend Equity ETF at 21.42%. The Vanguard Total Bond Market Index Fund ETF Shares constitute 14.68%, providing some fixed-income exposure. Smaller allocations are made to Texas Instruments and MicroStrategy. This composition suggests a focus on U.S. equities with a modest allocation to bonds, offering a balance between growth and income.

Growth Info

Historically, the portfolio has demonstrated strong performance, with a compound annual growth rate (CAGR) of 12.05%. However, it has also experienced significant volatility, evidenced by a maximum drawdown of -33.52%. This indicates that while the portfolio has the potential for substantial growth, it is also susceptible to considerable losses during market downturns. Understanding past performance helps set realistic expectations, but it's crucial to remember that historical data can't predict future results perfectly. Investors should consider their risk tolerance in light of these fluctuations.

Projection Info

Monte Carlo simulations, which use historical data to project future outcomes, suggest a wide range of potential returns. With 1,000 simulations, the median outcome shows a 554.95% increase, while the 5th percentile indicates a potential loss of -27.53%. The simulations indicate a high probability of positive returns, with 916 out of 1,000 simulations being profitable. While these projections offer a glimpse into possible future performance, they are based on past data and assumptions, which may not hold true. Investors should use these projections as one of many tools in their decision-making process.

Asset classes Info

  • Stocks
    85%
  • Bonds
    15%

The portfolio is heavily weighted towards stocks, comprising 85.27% of the total allocation, with bonds making up 14.52%. This allocation offers potential for higher returns, typical of equity-heavy portfolios, but also comes with increased volatility. The inclusion of bonds provides some level of stability and income, balancing out the risk associated with equities. Investors seeking growth with moderate risk may find this allocation suitable, but those with lower risk tolerance might consider increasing their bond exposure to reduce volatility.

Sectors Info

  • Real Estate
    23%
  • Technology
    18%
  • Financials
    9%
  • Health Care
    8%
  • Consumer Discretionary
    6%
  • Industrials
    6%
  • Consumer Staples
    5%
  • Telecommunications
    5%
  • Energy
    4%
  • Basic Materials
    1%
  • Utilities
    1%

Sector allocation within the portfolio reveals a significant concentration in real estate (22.66%) and technology (17.51%). While this can lead to strong returns when these sectors perform well, it also increases the risk if they face downturns. The portfolio also includes financial services, healthcare, and consumer cyclicals, among others, providing some diversification. To mitigate sector-specific risks, investors might consider diversifying further across more sectors or rebalancing to ensure no single sector dominates the portfolio excessively.

Regions Info

  • North America
    85%

Geographically, the portfolio is predominantly focused on North America, with 84.94% of assets allocated to this region. This concentration exposes the portfolio to regional economic and political risks, while limiting exposure to potential growth opportunities in other parts of the world. A more globally diversified portfolio could reduce risk and enhance returns by capturing growth in emerging and developed markets outside North America. Investors might explore increasing exposure to international markets to achieve better geographic diversification.

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 aims to achieve the best possible risk-return ratio. By adjusting the allocation among existing assets, investors can potentially enhance returns without taking on additional risk. This doesn't necessarily mean adding new assets but rather reallocating within the current holdings. Investors seeking to optimize their portfolio should consider regular reviews and adjustments to maintain an optimal balance as market conditions and personal circumstances change.

Dividends Info

  • Vanguard Total Bond Market Index Fund ETF Shares 3.60%
  • Brixmor Property 3.70%
  • Schwab U.S. Dividend Equity ETF 2.50%
  • Texas Instruments Incorporated 2.70%
  • Vanguard S&P 500 ETF 1.20%
  • Weighted yield (per year) 2.39%

The portfolio offers a moderate dividend yield of 2.39%, with contributions from various holdings such as Brixmor Property (3.7%) and the Schwab U.S. Dividend Equity ETF (2.5%). Dividends can provide a steady income stream and contribute to total returns, especially during periods of market volatility. Investors seeking income might consider increasing their allocation to dividend-paying stocks or ETFs, while those focused on growth may prioritize capital appreciation over dividends. Balancing these priorities is key to aligning the portfolio with investment goals.

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) 0.03%

The portfolio benefits from relatively low costs, with the Total Expense Ratio (TER) at 0.03%. Low costs can significantly enhance long-term returns, as they reduce the drag on performance. While the current costs are minimal, investors should remain vigilant and periodically review fees to ensure they remain competitive. Comparing costs across similar products and considering no-cost trading platforms can further optimize returns. Keeping expenses low is a simple yet effective way to improve portfolio efficiency over time.

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