A balanced portfolio with a focus on US equities and a nod to clean energy

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 with a balanced risk profile, seeking growth through a substantial allocation to US equities while also expressing an interest in sustainable investments. The investor likely has a medium to long-term horizon, allowing time to weather market volatility and benefit from the growth potential of equities. A willingness to accept moderate risk in exchange for the possibility of higher returns is key, as is an openness to revisiting and adjusting the portfolio composition as market conditions and personal goals evolve.

Positions

  • Vanguard S&P 500 ETF
    VOO - US9229083632
    40.00%
  • Vanguard Total Stock Market Index Fund ETF Shares
    VTI - US9229087690
    30.00%
  • MFS LIFETIME 2050 FUND R6
    MFFKX - US55275E1846
    20.00%
  • iShares Global Clean Energy ETF
    ICLN - US4642882249
    10.00%

The portfolio is structured around a core of US equity exposure, with significant positions in the Vanguard S&P 500 ETF and Vanguard Total Stock Market Index Fund ETF Shares, making up 70% of the portfolio. The MFS LIFETIME 2050 FUND R6 and iShares Global Clean Energy ETF round out the portfolio, adding future-oriented and sustainable investment themes. This composition reflects a blend of broad market exposure and specific sector targeting, leaning heavily on stock assets with minimal bond and cash holdings.

Growth Info

Historically, this portfolio has shown a Compound Annual Growth Rate (CAGR) of 14.43%, with a maximum drawdown of -34.80%, indicating a relatively high level of volatility. The days contributing to 90% of returns are few, highlighting the impact of significant market movements on performance. This performance, while robust in the past, underscores the importance of understanding the volatility and drawdown risks inherent in the portfolio's composition.

Projection Info

Forward-looking projections, based on Monte Carlo simulations, suggest a wide range of potential outcomes, with the median scenario indicating a 422.3% increase. However, the presence of a 5th percentile scenario at just 50.6% growth points to substantial downside risk. While these simulations provide a useful range of potential outcomes, they rely on historical data, which may not predict future performance accurately, especially in rapidly changing market conditions.

Asset classes Info

  • Stocks
    97%
  • Bonds
    2%
  • Other
    1%
  • Cash
    0%
  • Not Classified
    0%

The portfolio's asset allocation is heavily skewed towards stocks (97%), with a nominal allocation in bonds (2%) and a small percentage classified as 'Other' (1%). This allocation strategy is conducive to growth but comes with higher volatility and risk, particularly in market downturns. Diversifying across more asset classes could provide a buffer against market volatility while still allowing for growth.

Sectors Info

  • Technology
    30%
  • Financials
    13%
  • Industrials
    11%
  • Telecommunications
    8%
  • Health Care
    8%
  • Consumer Discretionary
    7%
  • Utilities
    7%
  • Consumer Staples
    5%
  • Real Estate
    3%
  • Energy
    3%
  • Basic Materials
    2%
  • Consumer Discretionary
    2%

Sector allocation is predominantly in technology (30%), which, while offering growth potential, also introduces sector-specific risks, such as regulatory changes and market sentiment shifts. Financial Services and Industrials follow, providing some diversification. However, the heavy tilt towards technology necessitates a review to ensure alignment with the investor's risk tolerance and diversification goals.

Regions Info

  • North America
    87%
  • Europe Developed
    6%
  • Asia Emerging
    3%
  • Japan
    1%
  • Latin America
    1%
  • Asia Developed
    1%
  • Australasia
    0%
  • Africa/Middle East
    0%
  • Europe Emerging
    0%

Geographic allocation is heavily North American-centric (87%), with minimal exposure to developed Europe (6%) and emerging Asian markets (3%). This concentration in North America, while benefiting from the region's economic stability and growth, limits global diversification and exposure to potential growth in emerging markets.

Market capitalization Info

  • Mega-cap
    36%
  • Large-cap
    31%
  • Mid-cap
    22%
  • Small-cap
    6%
  • Micro-cap
    2%

The market capitalization breakdown shows a preference for larger companies (Mega and Big caps constitute 67% of the portfolio). While this bias towards larger companies can offer stability, it may also limit growth potential and diversification benefits offered by smaller companies, which are often more agile and can provide higher returns albeit with higher risk.

Redundant positions Info

  • Vanguard S&P 500 ETF
    Vanguard Total Stock Market Index Fund ETF Shares
    MFS LIFETIME 2050 FUND R6
    High correlation

The high correlation observed among the Vanguard S&P 500 ETF, Vanguard Total Stock Market Index Fund ETF Shares, and MFS LIFETIME 2050 FUND R6 suggests a redundancy that may not contribute significantly to diversification. This overlap indicates an opportunity to reassess and potentially reallocate assets to reduce duplication and enhance portfolio efficiency.

Dividends Info

  • iShares Global Clean Energy ETF 1.50%
  • MFS LIFETIME 2050 FUND R6 6.30%
  • Vanguard S&P 500 ETF 1.10%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.10%
  • Weighted yield (per year) 2.18%

The dividend yield across the portfolio averages at 2.18%, with the MFS LIFETIME 2050 FUND R6 offering a notably higher yield. While dividends contribute to total returns, the focus should be on balancing income generation with growth potential and risk management, especially considering the portfolio's growth-oriented composition.

Ongoing product costs Info

  • iShares Global Clean Energy ETF 0.41%
  • MFS LIFETIME 2050 FUND R6 0.44%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.15%

With a total expense ratio (TER) of 0.15%, the portfolio benefits from relatively low costs, an important factor in enhancing long-term returns. The low costs of the Vanguard ETFs contribute positively, while the slightly higher costs of the iShares Global Clean Energy ETF and MFS LIFETIME 2050 FUND R6 are justified by their specialized investment focus.

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.

Optimizing the portfolio's risk-return profile could involve diversifying asset classes and reducing overlap among highly correlated assets. This process, guided by the Efficient Frontier principle, seeks to achieve the most favorable risk-return trade-off. However, it's crucial to remember that optimization is based on historical data, which may not always predict future performance accurately.

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