Balanced Risk Profile with Strong Diversification and Impressive Historical Performance Shows Growth Potential

Report created on Dec 4, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio is composed of three ETFs, with a heavy focus on U.S. equities through the Vanguard S&P 500 ETF making up 65%. The remaining 35% is split between the Vanguard Total International Stock Index Fund ETF Shares and the Invesco NASDAQ 100 ETF. This composition shows a robust focus on broad market indices, ensuring a diversified investment base. A mix of domestic and international exposure provides a balanced approach to capturing global market opportunities. Maintaining a diversified portfolio is crucial to mitigating risks associated with market volatility and economic uncertainty.

Growth Info

The historical performance of the portfolio is impressive, with a compound annual growth rate (CAGR) of 14.45%. This suggests strong returns over time, significantly above average market returns. However, it also faced a maximum drawdown of -26.53%, reflecting potential volatility during market downturns. Understanding past performance helps set realistic expectations for future growth. While past performance is no guarantee of future results, it provides a reference point for assessing the portfolio's resilience and potential. Regularly reviewing performance and adjusting the portfolio as needed can help maintain a favorable risk-return balance.

Projection Info

Using a Monte Carlo simulation with 1,000 iterations, the portfolio's future performance was projected. This simulation provides a range of possible outcomes based on random sampling of returns. With an annualized return of 14.27%, the 50th percentile suggests a potential portfolio value increase of 437.17%. Such projections highlight the potential for significant growth while acknowledging variability in outcomes. Monte Carlo simulations are valuable for understanding the range of possible future returns, aiding in planning and goal-setting. Continual assessment and adjustments based on projections can help align the portfolio with long-term financial objectives.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted in stocks, with 99.64% allocated to equities. This indicates a high exposure to market movements and potential for growth. A small allocation to cash and other assets provides minimal diversification beyond equities. Understanding asset class allocation is essential for managing risk and ensuring alignment with investment goals. A heavy equity allocation can offer growth but also increases exposure to market volatility. To balance risk and return, consider diversifying into other asset classes, such as bonds or alternative investments, depending on risk tolerance and investment horizon.

Sectors Info

  • Technology
    32%
  • Financials
    13%
  • Consumer Discretionary
    11%
  • Health Care
    10%
  • Telecommunications
    9%
  • Industrials
    8%
  • Consumer Staples
    6%
  • Energy
    3%
  • Basic Materials
    3%
  • Utilities
    3%
  • Real Estate
    2%

The sector allocation is diversified across 11 sectors, with technology leading at 31.72%. Financial services, consumer cyclicals, and healthcare also have significant representation. This diversification across sectors helps mitigate risks associated with sector-specific downturns. Sector allocation plays a crucial role in managing portfolio risk and capitalizing on growth opportunities. By spreading investments across various sectors, the portfolio reduces reliance on any single industry. Regularly reviewing sector exposure and adjusting allocations based on economic and market trends can enhance portfolio resilience and growth potential.

Regions Info

  • North America
    81%
  • Europe Developed
    8%
  • Asia Emerging
    3%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is primarily focused on North America, with 80.80% allocation. It also includes exposure to Europe, Asia, and other regions, providing a global investment perspective. Geographic diversification helps mitigate risks associated with regional economic fluctuations and political events. A well-diversified geographic allocation allows investors to capitalize on opportunities across different markets. Balancing geographic exposure can enhance portfolio stability and growth potential. Consider evaluating regional economic trends and adjusting geographic allocations to optimize the portfolio's performance in line with global market dynamics.

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 optimization chart suggests that the current portfolio is well-positioned along the efficient frontier, balancing risk and return. However, there may be opportunities to optimize further by adjusting allocations to achieve a more conservative or riskier profile, depending on preferences. Moving along the efficient frontier can help tailor the portfolio to specific risk appetites and financial goals. Consider exploring different asset class combinations and allocations to enhance risk-adjusted returns. Regularly reviewing and rebalancing the portfolio can ensure it remains aligned with evolving investment objectives and market conditions.

Dividends Info

  • Invesco NASDAQ 100 ETF 0.60%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 2.90%
  • Weighted yield (per year) 1.45%

The portfolio's dividend yield is 1.45%, with contributions from all three ETFs. The Vanguard Total International Stock Index Fund ETF Shares offers the highest yield at 2.9%. Dividends provide a source of income and can contribute to total returns, especially in volatile markets. Understanding dividend yield is important for investors seeking income generation and capital appreciation. A balanced approach to dividends can enhance portfolio stability and provide a buffer during market downturns. Consider reinvesting dividends to take advantage of compounding returns, or using them for income, based on financial goals.

Ongoing product costs Info

  • Invesco NASDAQ 100 ETF 0.15%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.06%

The portfolio's total expense ratio (TER) is 0.06%, reflecting low investment costs. This is achieved through the use of cost-effective ETFs, minimizing the impact of fees on returns. Keeping investment costs low is crucial for maximizing net returns over time. Low costs enhance the portfolio's efficiency and contribute to better performance. Regularly reviewing and managing investment costs can help maintain a favorable cost structure. Consider evaluating alternative investment options to ensure the portfolio remains cost-effective and aligned with financial objectives.

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