A balanced portfolio with strong US focus and moderate diversification across sectors

Report created on Jan 5, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio is primarily composed of ETFs, with the Vanguard S&P 500 ETF making up 52% of the allocation. This indicates a strong tilt towards large-cap US equities. The inclusion of a money market fund (20%) provides liquidity and stability, while the Vanguard Information Technology ETF (13%) adds a growth element. A small portion (5%) is allocated to Berkshire Hathaway, offering exposure to a diversified conglomerate. Compared to common benchmarks, this portfolio leans heavily on US equities with moderate diversification. For a balanced profile, consider adding more asset classes to enhance diversification.

Growth Info

Historically, the portfolio has shown a solid CAGR of 11.84%, indicating strong growth over time. This performance is commendable, especially when compared to the S&P 500's average returns. However, the maximum drawdown of -29.29% suggests vulnerability during market downturns. It's important to remember that past performance doesn't guarantee future results. To mitigate potential drawdowns, consider diversifying further into fixed-income securities or other asset classes that may offer more stability during volatile periods.

Projection Info

The Monte Carlo simulations, which use historical data to predict future outcomes, show promising potential for this portfolio. With 985 out of 1,000 simulations resulting in positive returns, the probability of growth is high. The median projection suggests a 301.03% increase, though it's crucial to note that these are estimates based on past data and not certainties. For a balanced risk approach, maintaining a diversified asset allocation can help manage uncertainties and potentially improve future outcomes.

Asset classes Info

  • Stocks
    80%
  • No data
    20%

The portfolio is heavily weighted towards stocks at approximately 80%, with a significant portion in cash through a money market fund. This allocation suggests a focus on growth with some liquidity for safety. Compared to typical balanced portfolios, there is a lack of fixed-income exposure, which could provide more consistent returns and reduce volatility. To align with a balanced risk profile, consider incorporating bonds or other fixed-income securities to achieve a more diversified asset class mix.

Sectors Info

  • Technology
    31%
  • No data
    20%
  • Financials
    14%
  • Health Care
    7%
  • Consumer Discretionary
    6%
  • Industrials
    5%
  • Telecommunications
    5%
  • Consumer Staples
    4%
  • Energy
    2%
  • Basic Materials
    2%
  • Utilities
    2%
  • Real Estate
    1%

The portfolio is notably technology-heavy, with 31% allocated to this sector, which could lead to higher volatility, especially during interest rate fluctuations. Financial services and healthcare provide additional diversification, but the portfolio lacks significant exposure to sectors like utilities and real estate. This composition aligns with growth objectives but may benefit from more sector balance to mitigate risks. Consider rebalancing by increasing exposure to underrepresented sectors to enhance diversification.

Regions Info

  • North America
    70%
  • No data
    20%
  • Europe Developed
    4%
  • Asia Emerging
    2%
  • Japan
    2%
  • Asia Developed
    1%
  • Australasia
    1%

With 70% exposure to North America, the portfolio is heavily US-centric. While this aligns with the strong performance of US markets historically, it limits exposure to international growth opportunities. The remaining allocation is spread thinly across other regions, offering minimal diversification benefits. To enhance geographic diversification, consider increasing investments in emerging markets and other developed regions, which may offer growth potential and reduce reliance on the US market.

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 concept. This involves adjusting the current asset allocation to achieve the best possible risk-return ratio. While the portfolio is already well-structured, exploring slight rebalancing could enhance efficiency. This doesn't necessarily mean adding new assets but rather fine-tuning existing allocations to align with optimal risk and return levels. Regularly reviewing and adjusting the portfolio can help maintain this balance.

Dividends Info

  • Fidelity® Government Money Market Fund 4.50%
  • Vanguard Information Technology Index Fund ETF Shares 0.60%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.40%
  • Weighted yield (per year) 1.94%

The portfolio's dividend yield stands at 1.94%, providing a modest income stream. The Fidelity Government Money Market Fund offers the highest yield at 4.5%, contributing to the portfolio's stability. Dividend income can be an important component of total returns, especially for investors seeking regular income. To enhance yield, consider increasing allocation to high-dividend-paying stocks or funds, while ensuring they align with overall investment goals and risk tolerance.

Ongoing product costs Info

  • Vanguard Information Technology Index Fund ETF Shares 0.10%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.04%

The portfolio's total expense ratio (TER) is impressively low at 0.04%, reflecting cost-efficient management. Low costs are crucial for maximizing long-term returns, as they reduce the drag on performance. This aligns well with best practices for cost management in investing. Continue to monitor and evaluate the costs, ensuring that any new investments or changes maintain this low-cost structure, which supports better performance over time.

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