A balanced portfolio with strong dividend yield and high technology sector exposure

Report created on Feb 4, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio consists mainly of ETFs, with a significant portion in equity-focused funds. Notably, the JPMorgan Nasdaq Equity Premium Income ETF holds the highest weight at nearly 19%. This composition leans towards equity, with 85% allocated to stocks, 8% to bonds, and a small portion in cash. Compared to a typical balanced benchmark, this equity weighting is higher, indicating a growth-oriented approach. Diversification is moderate, with a focus on U.S. markets. To enhance balance, consider increasing bond exposure, which might reduce volatility and align more closely with a traditional balanced benchmark.

Growth Info

Historically, the portfolio has performed well, achieving a CAGR of 12.91%, which is impressive for a balanced profile. The maximum drawdown of -15.50% indicates some volatility, but the strong returns may compensate for this risk. Compared to similar portfolios, this performance is above average, suggesting effective asset selection. It's important to remember that past performance is not a guarantee of future results. To maintain this level of performance, regular reviews and adjustments based on market conditions are advisable.

Projection Info

Using Monte Carlo simulations, the portfolio shows promising forward projections. With 1,000 simulations, the median outcome suggests a potential return of 436.7%, with a high likelihood of positive returns in 991 of the simulations. The Monte Carlo method projects future scenarios based on historical data, which can help in understanding potential risks and rewards. However, it's crucial to acknowledge that these projections are not predictions. Regularly updating these simulations with fresh data can provide more accurate insights and help in making informed decisions.

Asset classes Info

  • Stocks
    85%
  • Bonds
    8%
  • No data
    5%
  • Cash
    2%

The portfolio's asset allocation is heavily weighted towards stocks, accounting for 85% of the total. Bonds make up 8%, with a minimal allocation to cash and unclassified assets. This distribution suggests a focus on growth, which can lead to higher returns but also increased volatility. Compared to benchmark norms, this allocation is more aggressive. To enhance diversification, consider increasing bond exposure, which can provide stability during market downturns. A more balanced allocation could improve the risk-return profile.

Sectors Info

  • Technology
    31%
  • Energy
    13%
  • Financials
    11%
  • Consumer Discretionary
    10%
  • Health Care
    8%
  • Telecommunications
    8%
  • Industrials
    7%
  • Consumer Staples
    6%
  • Utilities
    2%
  • Basic Materials
    2%
  • Real Estate
    1%

Sector allocation is notably concentrated in technology, which accounts for 31% of the portfolio. Energy and financial services also have significant weights. This tech-heavy focus aligns with current market trends but may lead to higher volatility, especially during economic shifts or interest rate changes. Compared to common benchmarks, the sector diversification is less balanced. To mitigate sector-specific risks, consider diversifying into underrepresented sectors like healthcare or consumer staples, which can provide stability and reduce overall portfolio risk.

Regions Info

  • North America
    87%
  • Europe Developed
    6%
  • Asia Developed
    2%
  • Japan
    2%
  • Asia Emerging
    1%
  • Australasia
    1%
  • Latin America
    1%
  • Africa/Middle East
    1%

The portfolio's geographic allocation is predominantly focused on North America, with 87% exposure. This concentration may limit diversification benefits, as it relies heavily on the U.S. market. Compared to global benchmarks, this allocation is less diversified geographically. Expanding exposure to international markets, particularly in emerging regions, could enhance diversification and reduce reliance on the U.S. economy. This approach might also capture growth opportunities in other regions, potentially improving the portfolio's risk-adjusted returns.

Market capitalization Info

  • Large-cap
    37%
  • Mega-cap
    32%
  • Mid-cap
    13%
  • Small-cap
    3%
  • Micro-cap
    1%

Market capitalization distribution is skewed towards large-cap stocks, with big and mega caps comprising 69% of the portfolio. This focus on larger companies can provide stability and lower volatility, as these firms are typically more established. However, the limited exposure to small and micro-cap stocks may restrict growth potential. Compared to benchmarks, this allocation is conservative. To increase growth opportunities, consider adding more small-cap exposure, which can offer higher returns albeit with increased risk.

Redundant positions Info

  • Invesco NASDAQ 100 ETF
    JPMorgan Nasdaq Equity Premium Income ETF
    Vanguard S&P 500 ETF
    High correlation

The portfolio includes several highly correlated assets, particularly among U.S. equity ETFs. This correlation can limit diversification benefits, as these assets tend to move together during market fluctuations. While correlation is not inherently negative, it can amplify risk during downturns. To improve diversification, consider reducing holdings in overlapping assets and adding uncorrelated investments. This strategy can help manage risk and enhance overall portfolio resilience, especially during volatile market periods.

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 can be optimized using the Efficient Frontier, focusing on balancing risk and return. Currently, the portfolio's risk score is moderate, but there is room for improvement by adjusting asset weights. The Efficient Frontier helps identify the best possible risk-return ratio based on existing assets. Consider reallocating within the current holdings to achieve a more efficient portfolio. This strategy can enhance returns without significantly increasing risk, ensuring a better alignment with investment goals.

Dividends Info

  • JPMorgan Core Plus Bond 4.70%
  • JPMorgan Equity Premium Income ETF 6.70%
  • JPMorgan Nasdaq Equity Premium Income ETF 9.00%
  • Invesco NASDAQ 100 ETF 0.60%
  • Schwab U.S. Dividend Equity ETF 3.60%
  • VanEck Semiconductor ETF 0.40%
  • Vanguard Small-Cap Index Fund ETF Shares 1.30%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard International High Dividend Yield Index Fund ETF Shares 4.70%
  • Weighted yield (per year) 4.28%

The portfolio boasts a strong dividend yield of 4.28%, thanks to holdings like the JPMorgan Nasdaq Equity Premium Income ETF with a 9.00% yield. Dividends provide a steady income stream, which is beneficial for investors seeking regular cash flow. This yield is competitive compared to market averages, indicating a focus on income generation. Maintaining a balance between high-yield and growth-oriented assets can optimize returns. Regularly reviewing dividend sustainability and potential growth can ensure continued income benefits.

Ongoing product costs Info

  • JPMorgan Core Plus Bond 0.40%
  • JPMorgan Equity Premium Income ETF 0.35%
  • JPMorgan Nasdaq Equity Premium Income ETF 0.35%
  • Invesco NASDAQ 100 ETF 0.15%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • VanEck Semiconductor ETF 0.35%
  • Vanguard Small-Cap Index Fund ETF Shares 0.05%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard International High Dividend Yield Index Fund ETF Shares 0.22%
  • Weighted costs total (per year) 0.23%

The portfolio's total expense ratio (TER) is 0.23%, which is relatively low and supports better long-term performance by minimizing costs. The Vanguard S&P 500 ETF, with a TER of 0.03%, is particularly cost-effective. Keeping expenses low is crucial, as high costs can erode returns over time. This efficient cost structure is a positive aspect of the portfolio. Regularly reviewing and comparing TERs with similar funds can help maintain cost efficiency and enhance net returns.

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