A balanced and dividend-focused portfolio with a strong tilt towards US equities

Report created on Jun 16, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

1/5
Single-Focused
Less diversification More diversification

Positions

This portfolio predominantly consists of US-based equities and real estate investments, with a significant emphasis on dividend-yielding assets. The allocation is heavily weighted towards four ETFs that focus on US dividend stocks and the S&P 500, alongside a real estate index fund. This composition suggests a strategy aimed at generating income through dividends while seeking growth through broad market exposure. The notable absence of international equities and other asset classes like bonds or commodities indicates a single-focused approach, potentially limiting diversification benefits.

Growth Info

The historical performance, with a Compound Annual Growth Rate (CAGR) of 11.42%, is impressive, showing strong returns over the period analyzed. The maximum drawdown of -35.26% indicates a significant level of volatility, which is expected given the equity-heavy composition. The days contributing most to returns highlight the portfolio's susceptibility to market swings. Such performance underscores the importance of understanding the balance between risk and reward, especially for portfolios with concentrated market exposure.

Projection Info

The Monte Carlo simulation, with 1,000 iterations, projects a wide range of outcomes but leans positively, showing a median increase of 279.9%. This forward projection, while optimistic, should be interpreted with caution. It's based on historical data, which does not guarantee future results. The high number of simulations ending in positive returns reinforces the potential for growth but also underscores the importance of preparing for volatility.

Asset classes Info

  • Stocks
    82%
  • Real Estate
    18%

The asset class distribution reveals an 82% allocation to stocks and 18% to real estate. This mix supports a strategy focused on growth and income but lacks the balance that bonds or alternative investments could provide. The absence of cash holdings and minimal asset class diversity could expose the portfolio to higher short-term risk during market downturns, suggesting a need for greater balance to mitigate volatility.

Sectors Info

  • Real Estate
    18%
  • Technology
    15%
  • Financials
    12%
  • Health Care
    11%
  • Consumer Staples
    11%
  • Energy
    8%
  • Industrials
    8%
  • Consumer Discretionary
    8%
  • Telecommunications
    5%
  • Utilities
    2%
  • Basic Materials
    1%

Sector allocation is relatively diversified within the equities portion, with technology, financial services, and healthcare leading. This reflects a blend of growth-oriented and defensive sectors, a prudent approach for balancing potential returns with risk. However, the heavy concentration in real estate (18%) could increase sensitivity to sector-specific risks, such as interest rate changes. Balancing sector exposures could reduce volatility and improve resilience against market shifts.

Regions Info

  • North America
    99%
  • Europe Developed
    1%

The geographic allocation is heavily skewed towards North America (99%), with minimal exposure to developed Europe. This concentration in the US market enhances potential for growth given its economic stability but raises concerns about geographic diversification. Expanding into international markets could provide a buffer against US-specific economic downturns and offer access to growth opportunities in emerging markets.

Market capitalization Info

  • Large-cap
    41%
  • Mid-cap
    30%
  • Mega-cap
    20%
  • Small-cap
    6%
  • Micro-cap
    2%

The market capitalization breakdown shows a balanced exposure across big, medium, mega, and smaller companies. This diversified market cap distribution is beneficial for risk management, blending the stability of larger companies with the growth potential of smaller firms. However, the minor allocations to small and micro caps limit exposure to high-growth opportunities, which could be adjusted based on risk tolerance and growth objectives.

Redundant positions Info

  • Vanguard High Dividend Yield Index Fund ETF Shares
    Schwab U.S. Dividend Equity ETF
    High correlation

The high correlation between the Vanguard High Dividend Yield and Schwab U.S. Dividend Equity ETFs indicates redundancy, which could dilute diversification benefits. In portfolios, especially those aiming for income and growth, identifying and minimizing overlapping investments is crucial for enhancing risk-adjusted returns. Diversifying across less correlated assets or sectors could improve portfolio resilience against market volatility.

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's current configuration, while strong in dividends and US equities, could benefit from optimization to enhance diversification and reduce correlated risks. Utilizing the Efficient Frontier concept could help in identifying an allocation that offers the best possible return for a given level of risk. This might involve reducing overlap in highly correlated assets and broadening the asset class and geographic exposure.

Dividends Info

  • Schwab U.S. Dividend Equity ETF 3.80%
  • Vanguard Real Estate Index Fund ETF Shares 4.00%
  • Vanguard S&P 500 ETF 1.30%
  • Vanguard High Dividend Yield Index Fund ETF Shares 2.80%
  • Weighted yield (per year) 2.88%

The emphasis on dividend-yielding investments results in an attractive combined yield of 2.88%, highlighting the portfolio's income-generating focus. Dividends can provide a steady income stream and contribute to total return, especially in volatile or bear markets. However, relying heavily on dividends may skew the portfolio towards certain sectors, potentially limiting growth prospects. Balancing dividend strategies with growth-oriented investments could enhance long-term performance.

Ongoing product costs Info

  • Schwab U.S. Dividend Equity ETF 0.06%
  • Vanguard Real Estate Index Fund ETF Shares 0.12%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard High Dividend Yield Index Fund ETF Shares 0.06%
  • Weighted costs total (per year) 0.06%

The portfolio's overall expense ratio is impressively low at 0.06%, which is beneficial for maximizing net returns over time. Keeping investment costs low is a fundamental principle of successful long-term investing, as high fees can significantly erode earnings. This cost efficiency is a strong aspect of the portfolio, supporting better accumulation of wealth.

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