A balanced portfolio with strong domestic focus and low diversification across sectors

Report created on Jan 13, 2025

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 heavily weighted towards equities, with 99.65% in stocks and a minor portion in cash. The majority is invested in the Vanguard Total Stock Market Index Fund ETF, comprising 70% of the portfolio. This allocation leans towards a broad exposure to the U.S. market. While this structure supports growth, it lacks diversification, potentially increasing vulnerability to market-specific risks. To enhance stability, consider diversifying across different asset classes, such as bonds or international equities, which can offer a buffer during market downturns.

Growth Info

Historically, the portfolio has shown robust growth with a Compound Annual Growth Rate (CAGR) of 13.93%. This performance is impressive, especially when compared to typical market benchmarks. However, the maximum drawdown of -24.07% indicates potential volatility. While past performance is not indicative of future results, understanding these metrics helps set realistic expectations. To mitigate future risks, consider incorporating assets with lower volatility, which may help reduce the impact of drawdowns on overall portfolio value.

Projection Info

The Monte Carlo simulation, which uses historical data to project future performance, indicates a wide range of potential outcomes. With an annualized return of 15.17%, the median projection suggests significant growth. However, the variability underscores the uncertainty inherent in market predictions. While simulations offer valuable insights, they are not guarantees. To prepare for various scenarios, regularly review and adjust your portfolio based on changing market conditions and personal financial goals.

Asset classes Info

  • Stocks
    100%

The portfolio is concentrated in a single asset class—stocks. This singular focus limits diversification benefits, exposing the portfolio to equity market volatility. Diversifying across multiple asset classes, such as bonds or real estate, can reduce risk and enhance return potential. By spreading investments across different types of assets, you can achieve a more balanced portfolio that is better equipped to weather market fluctuations and achieve long-term financial objectives.

Sectors Info

  • Technology
    29%
  • Financials
    13%
  • Health Care
    11%
  • Consumer Discretionary
    11%
  • Industrials
    9%
  • Telecommunications
    9%
  • Consumer Staples
    7%
  • Energy
    5%
  • Real Estate
    2%
  • Utilities
    2%
  • Basic Materials
    2%

Technology dominates the sector allocation at 28.75%, followed by financial services and healthcare. This concentration in tech could lead to higher volatility, especially during market corrections or interest rate hikes. While these are generally strong sectors, a more balanced sector allocation could reduce risk. Consider increasing exposure to underrepresented sectors to achieve a more even distribution, which can help improve stability and capitalize on diverse economic trends.

Regions Info

  • North America
    99%
  • Europe Developed
    1%

The portfolio is overwhelmingly concentrated in North America, with 99.31% of assets allocated there. This geographic concentration limits exposure to international growth opportunities and may increase risk related to regional economic downturns. Expanding geographic diversification by including more international equities can help mitigate these risks. By investing in a broader range of global markets, you can benefit from growth in different regions and reduce reliance on the U.S. 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 shows potential for optimization using the Efficient Frontier, which aims to achieve the best possible risk-return ratio. By adjusting the allocation among current assets, you can enhance efficiency without adding new investments. This approach focuses on maximizing returns for a given level of risk. Regularly reassess your portfolio to ensure it remains aligned with your risk tolerance and investment objectives, optimizing for both growth and stability.

Dividends Info

  • Invesco NASDAQ 100 ETF 0.60%
  • Schwab U.S. Dividend Equity ETF 3.70%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Weighted yield (per year) 1.71%

The portfolio's total dividend yield stands at 1.71%, with the Schwab U.S. Dividend Equity ETF contributing the highest yield at 3.7%. Dividends provide a steady income stream and can be reinvested to compound growth over time. For investors seeking income, maintaining or increasing exposure to high-dividend assets can be beneficial. However, balance is key; ensure the focus on dividends does not compromise growth potential by overly concentrating on yield at the expense of diversification.

Ongoing product costs Info

  • Invesco NASDAQ 100 ETF 0.15%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.05%

The portfolio's total expense ratio (TER) is impressively low at 0.05%, which is beneficial for long-term growth. Lower costs mean more of your money stays invested, compounding over time. This efficient cost structure aligns well with investment best practices. Continuing to monitor and manage expenses is crucial; periodically review holdings to ensure they remain cost-effective and aligned with your financial goals.

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