A balanced portfolio with strong diversification and a focus on large-cap equities

Report created on Jan 10, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification

Positions

The portfolio consists of a mix of ETFs, predominantly large-cap equities, which make up 38.5% of the total. Bonds account for 20% of the portfolio, providing a cushion against volatility. The rest is diversified across small-cap, emerging markets, and dividend-focused funds. This composition aligns well with a balanced investment strategy, offering growth potential while mitigating risk. Consider reviewing the allocation periodically to ensure it remains aligned with your goals, especially as market conditions change.

Growth Info

Historically, this portfolio has shown a solid CAGR of 9.66%, indicating strong growth over time. This is comparable to major indices, reflecting its robust composition. However, the maximum drawdown of -30.37% highlights potential volatility. Understanding past performance helps set expectations, but remember that history doesn't predict the future. Regularly assess how performance aligns with your risk tolerance and adjust as needed to stay on track.

Projection Info

The Monte Carlo simulation, which uses historical data to model future outcomes, suggests a median return of 195.46% over the long term. This method offers a range of possible outcomes, helping investors understand potential risks and rewards. With 961 out of 1,000 simulations showing positive returns, the outlook is optimistic. Keep in mind that simulations are based on past data and assumptions, so they should be one of many tools used in decision-making.

Asset classes Info

  • Stocks
    79%
  • Bonds
    20%
  • Cash
    1%

The asset allocation heavily favors stocks at 79.47%, with bonds making up 19.84%. This balance provides growth potential while offering some stability through bonds. Such a distribution is typical for balanced portfolios, aiming to capture equity market gains while reducing risk with fixed-income securities. Ensure this allocation fits your risk profile and consider adjusting if your financial situation or goals change.

Sectors Info

  • Technology
    19%
  • Financials
    13%
  • Industrials
    9%
  • Consumer Discretionary
    9%
  • Health Care
    8%
  • Telecommunications
    6%
  • Consumer Staples
    5%
  • Energy
    4%
  • Basic Materials
    3%
  • Real Estate
    3%
  • Utilities
    2%

Sector allocation is diverse, with technology leading at 19.42%, followed by financial services and industrials. This spread is well-aligned with benchmark norms, ensuring no overconcentration. A tech-heavy focus can introduce volatility, especially during interest rate changes, so it's wise to monitor sector trends. Diversifying across sectors minimizes reliance on any single industry, reducing risk during economic shifts.

Regions Info

  • North America
    61%
  • Europe Developed
    8%
  • Asia Emerging
    4%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is heavily tilted towards North America at 61.22%, with limited exposure to other regions. This concentration may limit diversification benefits, especially if regional markets underperform. Expanding international exposure could enhance diversification and capture growth in emerging markets. Regularly review geographic allocations to ensure they align with your global investment outlook.

Redundant positions Info

  • Schwab U.S. Large-Cap Growth ETF
    Vanguard Large-Cap Index Fund ETF Shares
    High correlation

The portfolio contains highly correlated assets, particularly between Schwab U.S. Large-Cap Growth ETF and Vanguard Large-Cap Index Fund ETF Shares. High correlation means these assets move similarly, reducing diversification benefits. To optimize risk management, consider reducing overlap by selecting non-correlated assets that can provide better diversification during market downturns.

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 could benefit from optimization along the Efficient Frontier, which seeks the best risk-return balance. By adjusting the allocation of current assets, you can potentially enhance returns without increasing risk. This optimization focuses on maximizing efficiency, not necessarily diversification. Regularly review the portfolio to ensure it remains aligned with your risk-return preferences.

Dividends Info

  • Vanguard Intermediate-Term Bond Index Fund ETF Shares 3.50%
  • Schwab U.S. Dividend Equity ETF 3.70%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • SPDR® Portfolio Emerging Markets ETF 1.20%
  • Vanguard Small-Cap Index Fund ETF Shares 1.30%
  • Vanguard Short-Term Corporate Bond Index Fund ETF Shares 3.60%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 1.90%
  • Vanguard Large-Cap Index Fund ETF Shares 1.20%
  • Weighted yield (per year) 1.88%

With a total yield of 1.88%, dividends contribute moderately to returns. The Schwab U.S. Dividend Equity ETF offers the highest yield at 3.7%, enhancing income potential. Dividends can provide a steady income stream, which is beneficial in volatile markets. If income is a priority, consider reallocating to higher-yielding assets, but balance this with growth objectives.

Ongoing product costs Info

  • Vanguard Intermediate-Term Bond Index Fund ETF Shares 0.04%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • SPDR® Portfolio Emerging Markets ETF 0.07%
  • Vanguard Small-Cap Index Fund ETF Shares 0.05%
  • Vanguard Short-Term Corporate Bond Index Fund ETF Shares 0.04%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 0.05%
  • Vanguard Large-Cap Index Fund ETF Shares 0.04%
  • Weighted costs total (per year) 0.05%

The portfolio's total expense ratio (TER) is impressively low at 0.05%, supporting better long-term performance by minimizing costs. Low fees are crucial as they compound over time, significantly impacting net returns. Maintaining low costs is a positive aspect of this portfolio, and it’s advisable to continue monitoring expenses to ensure they remain competitive.

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