A concentrated dividend-focused portfolio with limited geographic and sector diversification

Report created on Apr 8, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

The portfolio is heavily concentrated in the Schwab U.S. Dividend Equity ETF, which makes up 80% of the holdings. This ETF focuses on dividend-paying U.S. stocks. The remaining 20% is split between the Invesco NASDAQ 100 ETF and individual stocks like Berkshire Hathaway and JPMorgan Chase. This composition indicates a focus on income through dividends, but the lack of diversification could expose the portfolio to higher risk. It is important to consider diversifying into other asset classes or regions to reduce potential volatility and improve the risk-return profile.

Growth Info

Historically, the portfolio has shown a Compound Annual Growth Rate (CAGR) of 11.45%, which is impressive. However, it has also experienced a maximum drawdown of -19.22%, indicating periods of significant decline. The portfolio's performance is concentrated in just 16 days, which suggests volatility. Comparing this to a benchmark can help gauge whether this performance is satisfactory. It's crucial to remember that past performance doesn't guarantee future results, so continuous monitoring and potential adjustments may be necessary.

Projection Info

Using a Monte Carlo simulation, which projects future outcomes based on historical data, the portfolio shows a promising potential. The median (50th percentile) projection suggests a significant growth to 670.8% of the initial investment. However, it's important to note that simulations are based on past data and assumptions, which might not hold true in the future. The portfolio's high number of simulations with positive returns is encouraging, but diversification could help mitigate risks not captured in historical data.

Asset classes Info

  • Stocks
    100%

The portfolio is entirely invested in stocks, which can offer high returns but also come with higher risk. This lack of diversification across asset classes could expose the portfolio to greater volatility. Typically, a balanced portfolio includes a mix of stocks, bonds, and possibly other assets. Diversifying into different asset classes can help smooth returns and reduce risk, especially during market downturns. Considering adding bonds or other low-correlated assets could provide more stability.

Sectors Info

  • Financials
    24%
  • Health Care
    15%
  • Technology
    13%
  • Consumer Staples
    13%
  • Energy
    10%
  • Industrials
    9%
  • Consumer Discretionary
    9%
  • Telecommunications
    6%
  • Basic Materials
    1%

The portfolio's sector allocation is skewed towards financial services and healthcare, with significant exposure to technology and consumer defensive sectors. This concentration can lead to sector-specific risks, particularly if these industries face downturns. The limited exposure to sectors like utilities and real estate may miss out on potential growth opportunities. Consider rebalancing to achieve a more even sector distribution, which can help mitigate sector-specific risks and enhance overall portfolio stability.

Regions Info

  • North America
    99%
  • Europe Developed
    1%

Geographically, the portfolio is overwhelmingly concentrated in North America, with 99% exposure. This lack of international diversification could increase vulnerability to regional economic downturns or policy changes. A more globally diversified portfolio might include investments in Europe, Asia, and emerging markets. This could reduce geographic risk and provide exposure to growth opportunities in other regions, which might be less correlated with North American markets.

Market capitalization Info

  • Large-cap
    57%
  • Mid-cap
    23%
  • Mega-cap
    15%
  • Small-cap
    4%
  • Micro-cap
    1%

The portfolio is predominantly invested in large-cap stocks, with 57% in big companies and 15% in mega-cap. While large-cap stocks are generally more stable, they may offer lower growth potential compared to small or mid-cap stocks. The limited exposure to small and micro-cap stocks could mean missing out on potential high-growth opportunities. Balancing investments across different market capitalizations can enhance diversification and potentially improve 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 be optimized for a better risk-return balance using the Efficient Frontier, which suggests a potential return of 20.62% at the same risk level. This optimization involves reallocating current assets to achieve the best possible risk-return ratio. While the current portfolio has performed well, exploring these optimization strategies could enhance performance. It's important to note that optimization is based on historical data and assumptions, which may not predict future outcomes.

Dividends Info

  • JPMorgan Chase & Co 1.70%
  • Invesco NASDAQ 100 ETF 0.70%
  • Schwab U.S. Dividend Equity ETF 4.20%
  • Weighted yield (per year) 3.52%

With a total dividend yield of 3.52%, this portfolio emphasizes income generation, making it appealing for investors seeking regular cash flow. The Schwab U.S. Dividend Equity ETF significantly contributes to this yield. Dividends can provide a cushion during market volatility, but relying heavily on dividend-paying stocks may limit growth potential. Balancing between growth and dividend stocks could enhance both income and capital appreciation.

Ongoing product costs Info

  • Invesco NASDAQ 100 ETF 0.15%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Weighted costs total (per year) 0.06%

The portfolio's total expense ratio (TER) is relatively low at 0.06%, which is beneficial for long-term returns. Lower costs mean more of your money stays invested, compounding over time. Keeping expenses low is a positive aspect of this portfolio, allowing for better net returns. However, always ensure that low costs do not come at the expense of diversification or quality. Regularly reviewing and comparing expense ratios can help maintain cost efficiency.

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