A balanced portfolio with significant concentration in North American equities and moderate risk exposure

Report created on Dec 8, 2024

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 composed entirely of ETFs, each holding a 20% stake, resulting in a balanced allocation across five different funds. This structure offers a mix of small-cap value, cash cows, high dividends, NASDAQ 100, and S&P 500 exposures. The equal weighting ensures a diversified approach within the constraints of the selected funds. However, the lack of diversity in asset types, primarily equities, may expose the portfolio to market volatility. To mitigate this risk, consider adding other asset classes like bonds or real estate investment trusts to enhance diversification and stability.

Growth Info

Historically, the portfolio has delivered an impressive compound annual growth rate (CAGR) of 19.26%. This suggests strong past performance, potentially driven by the robust returns of the U.S. equity market. However, the maximum drawdown of -21.17% indicates susceptibility to market downturns. Relying solely on historical data can be misleading, as past performance doesn't guarantee future results. To maintain a balanced risk-return profile, regular portfolio reviews and adjustments are recommended, especially during volatile market conditions.

Projection Info

Using Monte Carlo simulations, which analyze potential future outcomes based on historical data, the portfolio shows promising forward projections. With a median expected return of 1,127.98% and all simulations yielding positive returns, the outlook appears optimistic. However, it's important to remember that these projections are based on historical trends and assumptions that may not hold in the future. Investors should remain cautious and adaptable, considering both the potential gains and risks highlighted by these simulations.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily weighted towards equities, with a negligible cash allocation. This concentration in stocks offers the potential for high returns but also entails increased volatility and risk. Diversification across asset classes is crucial for risk management. By incorporating other asset types, such as bonds or commodities, the portfolio can achieve a more balanced risk-return profile and provide a buffer during market downturns. Consider evaluating the current allocation to ensure it aligns with the desired risk tolerance and investment goals.

Sectors Info

  • Technology
    27%
  • Consumer Discretionary
    13%
  • Industrials
    11%
  • Energy
    10%
  • Financials
    10%
  • Consumer Staples
    7%
  • Telecommunications
    7%
  • Health Care
    6%
  • Basic Materials
    3%
  • Utilities
    3%
  • Real Estate
    2%

Sector allocation reveals a significant concentration in technology, consumer cyclicals, and industrials, which together constitute over 50% of the portfolio. This concentration could lead to increased sensitivity to sector-specific risks and market fluctuations. While these sectors offer growth potential, it's crucial to maintain a balanced sectoral allocation to mitigate risks. Expanding exposure to underrepresented sectors, such as healthcare or utilities, can provide stability and reduce vulnerability to sector-specific downturns.

Regions Info

  • North America
    97%
  • Europe Developed
    1%
  • Japan
    1%

The portfolio's geographic exposure is predominantly in North America, with a minor allocation to other regions. This heavy reliance on North American markets may limit the portfolio's resilience to regional economic downturns. While North America offers a stable investment environment, diversifying geographically can enhance the portfolio's risk management. Consider increasing exposure to international markets to benefit from global growth opportunities and reduce regional concentration risks.

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.

Optimization through the Efficient Frontier involves adjusting the asset allocation to achieve the best possible risk-return ratio. The current portfolio, with its equal weighting, may not be at the optimal point on the Efficient Frontier. By reallocating assets based on historical performance and risk metrics, the portfolio can potentially achieve a more efficient balance. This doesn't necessarily mean adding new assets but rather adjusting the current allocation to maximize returns for the given level of risk.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Pacer US Cash Cows 100 ETF 1.80%
  • Fidelity® High Dividend ETF 2.70%
  • Invesco NASDAQ 100 ETF 0.60%
  • SPDR® Portfolio S&P 500 ETF 1.20%
  • Weighted yield (per year) 1.56%

The portfolio's dividend yield stands at 1.56%, supported by holdings in high-dividend ETFs. Dividends contribute to portfolio returns, providing a steady income stream and potential for reinvestment. However, the yield is modest compared to the broader market, indicating room for improvement. By exploring higher-yielding assets or increasing allocation to dividend-focused funds, the portfolio can enhance its income-generating potential and improve overall returns.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Pacer US Cash Cows 100 ETF 0.49%
  • Fidelity® High Dividend ETF 0.15%
  • Invesco NASDAQ 100 ETF 0.15%
  • SPDR® Portfolio S&P 500 ETF 0.02%
  • Weighted costs total (per year) 0.21%

The portfolio's total expense ratio (TER) is 0.21%, which is relatively low and beneficial for long-term returns. Lower costs mean more of your investment returns are retained, rather than lost to fees. However, it's essential to regularly review these costs, as even small differences can compound over time. Consider exploring alternative funds with lower fees or negotiating better terms to further reduce expenses and enhance net returns.

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