A balanced portfolio with heavy concentration in US equities and low diversification

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

What type of investor this portfolio is suitable for

Balanced Investors

This portfolio suits an investor seeking moderate growth with a balanced risk tolerance and a medium to long-term horizon. It emphasizes US equities, aiming for capital appreciation while maintaining low costs. Ideal for individuals comfortable with stock market volatility and focused on building wealth over time, this portfolio may appeal to those who prioritize simplicity and cost-effectiveness but are open to enhancing diversification for stability.

Positions

  • SPDR® Portfolio S&P 500 ETF
    SPLG - US78464A8541
    52.00%
  • Schwab S&P 500 Index Fund
    SWPPX - US8085098551
    39.00%
  • Schwab U.S. Large-Cap Growth ETF
    SCHG - US8085243009
    9.00%

This portfolio is heavily weighted towards US equities, with 52% in the SPDR® Portfolio S&P 500 ETF, 39% in the Schwab S&P 500 Index Fund, and 9% in the Schwab U.S. Large-Cap Growth ETF. The portfolio's composition leans significantly towards large-cap stocks, which are typically more stable but may limit diversification. Compared to a common benchmark, this portfolio lacks exposure to other asset classes like bonds or international equities. To achieve a more balanced approach, consider introducing different asset types to diversify risk and potentially enhance returns.

Growth Info

The portfolio's historical performance has been strong, with a Compound Annual Growth Rate (CAGR) of 14.39%. This impressive return outpaces many traditional benchmarks, indicating solid past performance. However, the max drawdown of -33.69% reflects significant volatility during downturns. It's important to remember that past performance doesn't guarantee future results. Consider strategies to mitigate drawdowns, such as diversifying into less volatile assets, to maintain stability during market fluctuations.

Projection Info

Forward projections using Monte Carlo simulations suggest a promising outlook, with a median return of 596.3% and an annualized return of 16.58%. Monte Carlo simulations use historical data to predict a range of possible outcomes, but they can't account for future market changes. While the projections are optimistic, it's crucial to remain cautious and regularly review the portfolio's alignment with personal risk tolerance and goals. Adjusting the portfolio to reflect changing market conditions can help optimize future performance.

Asset classes Info

  • Stocks
    100%
  • Cash
    0%

The portfolio is overwhelmingly concentrated in stocks, with a staggering 99.78% allocation. This heavy concentration limits exposure to other asset classes, reducing diversification benefits. A more diversified portfolio typically includes a mix of stocks, bonds, and perhaps alternative investments, which can help manage risk and smooth returns over time. Consider introducing bonds or other asset classes to balance the portfolio and potentially reduce overall risk.

Sectors Info

  • Technology
    35%
  • Financials
    12%
  • Health Care
    11%
  • Telecommunications
    10%
  • Consumer Discretionary
    7%
  • Industrials
    7%
  • Consumer Staples
    5%
  • Consumer Discretionary
    4%
  • Energy
    3%
  • Utilities
    2%
  • Real Estate
    2%
  • Basic Materials
    2%

Sector allocation is heavily skewed towards technology at 34.55%, followed by financial services and healthcare. This concentration exposes the portfolio to sector-specific risks, such as regulatory changes or market shifts. While tech stocks have driven recent growth, they can also experience higher volatility. A more balanced sector allocation could mitigate risks associated with overexposure to any single sector. Consider diversifying into underrepresented sectors to achieve a more stable risk-return profile.

Regions Info

  • North America
    99%
  • Europe Developed
    1%
  • Asia Developed
    0%

Geographically, the portfolio is nearly entirely focused on North America, with minimal exposure to Europe and Asia. This concentration limits the benefits of global diversification, which can reduce risk by spreading investments across different economic regions. Global diversification can provide a buffer against regional downturns and capture growth opportunities abroad. Consider increasing exposure to international markets to enhance diversification and take advantage of global economic trends.

Redundant positions Info

  • SPDR® Portfolio S&P 500 ETF
    Schwab S&P 500 Index Fund
    High correlation

The portfolio contains highly correlated assets, notably the SPDR® Portfolio S&P 500 ETF and the Schwab S&P 500 Index Fund. High correlation means these assets tend to move together, which may limit diversification benefits. Diversification aims to combine assets that react differently to market events, thus reducing overall portfolio risk. Consider replacing one of these overlapping assets with a less correlated investment to improve diversification and risk management.

Dividends Info

  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • SPDR® Portfolio S&P 500 ETF 1.30%
  • Schwab S&P 500 Index Fund 1.20%
  • Weighted yield (per year) 1.18%

The portfolio's dividend yield stands at 1.18%, which is relatively modest. Dividends can provide a steady income stream and contribute to total returns, especially in low-growth environments. While growth-focused portfolios may prioritize capital appreciation over income, it's beneficial to maintain a balance. Consider whether increasing exposure to higher-yielding assets aligns with your income needs and investment objectives.

Ongoing product costs Info

  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • SPDR® Portfolio S&P 500 ETF 0.02%
  • Schwab S&P 500 Index Fund 0.02%
  • Weighted costs total (per year) 0.02%

The portfolio boasts impressively low costs, with a Total Expense Ratio (TER) of 0.02%. Low costs are a significant advantage, as they enhance net returns over time. Minimizing expenses is a crucial component of a successful investment strategy, ensuring more of your returns stay in your pocket. Continue monitoring and optimizing for cost efficiency, ensuring that any new investments maintain this low-cost advantage.

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.

The portfolio may benefit from optimization using the Efficient Frontier, which seeks the best risk-return ratio based on current assets. However, the current high correlation between assets suggests limited diversification. Before optimizing, consider reducing overlap by replacing highly correlated assets. Once diversification is improved, optimization can help achieve a more efficient allocation, potentially enhancing returns without increasing risk.

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