A balanced portfolio with a strong focus on U.S. equities and limited bond exposure

Report created on Mar 18, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

1/5
Single-Focused
Less diversification More diversification

Positions

The portfolio is predominantly composed of U.S. equity ETFs, with a significant portion allocated to the Vanguard S&P 500 ETF at 40%. This is complemented by the Schwab U.S. Dividend Equity ETF and Schwab U.S. Large-Cap Growth ETF, each at 20%. The Invesco NASDAQ 100 ETF holds 15%, and a smaller allocation of 5% is in the Vanguard Total Bond Market Index Fund. Compared to a typical balanced portfolio, this one leans heavily towards equities, which may increase potential returns but also adds risk. It might be beneficial to consider increasing the bond allocation for better risk management and income stability.

Growth Info

The portfolio's historical performance shows a robust CAGR of 13.07%, indicating strong growth over time. A maximum drawdown of -25.42% suggests that while the portfolio has performed well, it has also experienced significant downturns. This highlights the importance of understanding volatility and risk tolerance. Comparing this performance to a benchmark like the S&P 500 can provide additional context. While past performance is informative, it's not a guarantee of future results, so maintaining a diversified approach is key to managing potential risks.

Projection Info

Forward projections using Monte Carlo simulations suggest a wide range of potential outcomes, with an annualized return of 11.36%. This method uses historical data to simulate future scenarios, offering insights into potential portfolio performance. However, it's important to note that these projections are not predictions but rather possibilities. The simulations show a high likelihood of positive returns, yet they also underscore the inherent uncertainty in investing. Regularly reviewing and adjusting the portfolio can help align it with changing market conditions and personal goals.

Asset classes Info

  • Stocks
    95%
  • Bonds
    5%

The portfolio is heavily weighted towards stocks, with 95% in equities and only 5% in bonds. This allocation might suit investors seeking growth, but it also increases exposure to equity market volatility. In contrast, a typical balanced portfolio might have a higher bond allocation to provide stability and income. Diversifying across more asset classes could enhance risk management and potentially improve returns. Consider evaluating the current asset mix to ensure it aligns with your risk tolerance and investment objectives.

Sectors Info

  • Technology
    32%
  • Consumer Discretionary
    11%
  • Financials
    11%
  • Health Care
    10%
  • Telecommunications
    10%
  • Consumer Staples
    6%
  • Industrials
    6%
  • Energy
    4%
  • Basic Materials
    1%
  • Utilities
    1%
  • Real Estate
    1%

The portfolio's sector allocation is notably concentrated in technology, comprising 32%. This concentration can lead to increased volatility, especially during periods of interest rate hikes or tech market downturns. Other sectors like consumer cyclicals, financial services, and healthcare offer more balanced exposure. Aligning sector weights closer to a broad market benchmark might reduce sector-specific risks. Diversifying across sectors can help mitigate potential downturns in any single area and provide a more stable investment experience.

Regions Info

  • North America
    94%
  • Europe Developed
    1%

Geographically, the portfolio is predominantly focused on North America, with 94% of assets allocated there. This concentration may limit exposure to international growth opportunities and increase vulnerability to regional economic changes. A more diversified geographic allocation could provide a buffer against local market downturns and tap into global growth potential. Consider exploring investments in developed and emerging markets outside North America to enhance diversification and potentially improve risk-adjusted returns.

Market capitalization Info

  • Mega-cap
    41%
  • Large-cap
    35%
  • Mid-cap
    17%
  • Small-cap
    1%

The portfolio's market capitalization is heavily skewed towards mega and big-cap stocks, making up 76% of the allocation. While these companies often provide stability and steady growth, the lack of small and mid-cap exposure might limit growth potential. Smaller companies can offer higher returns due to their growth prospects, albeit with increased risk. Balancing the portfolio with a wider range of market capitalizations could enhance diversification and provide opportunities for higher returns over the long term.

Redundant positions Info

  • Invesco NASDAQ 100 ETF
    Schwab U.S. Large-Cap Growth ETF
    High correlation

The portfolio includes highly correlated assets, particularly the Invesco NASDAQ 100 ETF and Schwab U.S. Large-Cap Growth ETF. High correlation means these assets tend to move in the same direction, which can reduce diversification benefits. In times of market downturns, this could amplify losses. To improve diversification, consider replacing one of these ETFs with a less correlated asset. Diversifying across different asset types and strategies can help manage risk and improve overall portfolio resilience.

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 has potential for optimization using the Efficient Frontier, which seeks the best risk-return ratio for a given set of assets. By adjusting allocations among the current holdings, the portfolio could potentially achieve a more favorable balance between risk and return. This process doesn't necessarily mean adding new assets but rather refining the existing mix. Regularly revisiting the portfolio's composition can help ensure it remains aligned with your risk tolerance and investment objectives.

Dividends Info

  • Vanguard Total Bond Market Index Fund ETF Shares 3.70%
  • Invesco NASDAQ 100 ETF 0.60%
  • Schwab U.S. Dividend Equity ETF 3.60%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Vanguard S&P 500 ETF 1.30%
  • Weighted yield (per year) 1.60%

The portfolio's dividend yield is modest at 1.60%, with the Schwab U.S. Dividend Equity ETF contributing significantly with a 3.60% yield. Dividends can provide a steady income stream and are particularly appealing in low-interest-rate environments. However, the overall yield is relatively low compared to income-focused portfolios. If income generation is a priority, consider increasing allocations to higher-yielding assets or funds. Balancing growth and income objectives is crucial for achieving long-term financial goals.

Ongoing product costs Info

  • Vanguard Total Bond Market Index Fund ETF Shares 0.03%
  • Invesco NASDAQ 100 ETF 0.15%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.06%

The portfolio's total expense ratio (TER) is impressively low at 0.06%, which supports better long-term performance by minimizing costs. Low costs are a critical factor in enhancing net returns over time. Compared to industry averages, this TER is highly competitive, allowing more of your investment returns to compound. While the current cost structure is excellent, it's always worth periodically reviewing expenses to ensure they remain competitive and aligned with your investment strategy.

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