Balanced equity portfolio blending factor tilts strong sector themes and global diversification
Report created on Jun 1, 2024Risk profile
4/7
Diversification profile
3/5
Positions
-
VT Vanguard Total Stock Market Index Fund ETF Shares
VTI - US9229087690 14.32% -
AV Avantis® U.S. Small Cap Value ETF
AVUV - US0250728773 14.28% -
DX WisdomTree Japan Hedged Equity Fund
DXJ - US97717W8516 14.28% -
SC Schwab U.S. Large-Cap Growth ETF
SCHG - US8085243009 14.28% -
SH Global X Defense Tech ETF
SHLD - US37960A5294 14.28% -
VH Vanguard Health Care Index Fund ETF Shares
VHT - US92204A5048 14.28% -
XM Invesco S&P MidCap Momentum ETF
XMMO - US46137V4648 14.28%
The structure is a pure equity mix split almost evenly across seven ETFs, each around 14% of the portfolio. That creates a simple but intentional design: broad US exposure, plus specific tilts to small-cap value, mid-cap momentum, large-cap growth, healthcare, Japan, and defense. Having everything in stocks means growth is clearly the priority over stability or income. A setup like this can work well for someone comfortable with market ups and downs who wants long-term capital growth. The even sizing of positions also keeps any single ETF from dominating, while still allowing each theme to matter. The key is recognizing that “balanced” here means balanced within equities, not across different asset classes.
Growth
Over the recent period, $1,000 grew to about $1,724, with a compound annual growth rate (CAGR) of 24.04%. CAGR is the smoothed “per year” growth rate, like your average speed over a long road trip. This handily beat both the US market and the global market by about 7.6 percentage points per year, which is a very strong gap over multiple years. The max drawdown of -14.65% was actually smaller than the benchmarks, meaning the worst slump was less painful than typical broad indices. That’s a very positive combination, but it’s still based on a short, unusually strong window; past outperformance like this can easily cool off in future cycles.
Asset classes
- Stocks 100%
Asset-class-wise, this is 100% in stocks, with no bonds, cash, or alternative assets in the mix. That’s straightforward and growth-focused, but it means no built-in “shock absorbers” during big market downturns. Many blended benchmarks for balanced investors would hold a chunk of bonds or cash-like assets to soften volatility and provide dry powder. The upside of going all-equity is higher expected long-term returns; historically, stocks have outpaced bonds over multi-decade horizons. The tradeoff is that drawdowns can be sharper and take longer to recover from. Keeping a separate cash or bond buffer outside this portfolio can help if shorter-term spending needs exist.
Sectors
- Industrials 27%
- Health Care 19%
- Technology 17%
- Consumer Discretionary 9%
- Financials 9%
- Telecommunications 5%
- Energy 5%
- Basic Materials 3%
- Consumer Staples 2%
- Real Estate 1%
- Utilities 1%
Sector-wise, the portfolio leans heavily on industrials, healthcare, and technology, with industrials alone making up more than a quarter of exposure. Healthcare is also strong, reflecting the dedicated healthcare ETF and large defensive holdings, while technology and consumer discretionary come through broad US and growth funds. Compared with typical broad-market allocations, this is more tilted toward industrial and defense-related names and somewhat underweight in boring-but-stable areas like consumer staples and utilities. Sector tilts like this can do very well when cyclical growth, innovation, or defense spending are rewarded, but they may lag if markets rotate toward defensive, high-dividend, or regulated industries.
Regions
- North America 78%
- Japan 14%
- Europe Developed 5%
- Asia Developed 1%
- Africa/Middle East 1%
- Latin America 1%
Geographically, the focus is clearly on North America at around 78%, with a significant satellite allocation to Japan through the hedged equity fund. Europe, other developed Asia, and emerging regions are present but relatively small. Compared with a global market-weighted index, this is more US-heavy and more Japan-focused, with lighter exposure elsewhere. Hedging the Japan position also strips out yen–dollar currency swings, turning it into more of a pure equity bet on Japanese companies. This kind of regional setup tends to work well when US and Japanese markets outperform, but it offers less diversification if leadership shifts decisively toward other regions over a full cycle.
Market capitalization
- Large-cap 29%
- Mega-cap 26%
- Mid-cap 20%
- Small-cap 17%
- Micro-cap 8%
By market cap, the mix is quite balanced: meaningful slices in mega-cap and large-cap, but also solid exposure to mid-, small-, and even micro-caps. That’s less top-heavy than many broad indices, which often concentrate heavily in a handful of mega-caps. Smaller companies tend to be more volatile day-to-day but can offer higher long-term growth potential, especially when paired with systematic strategies like small-cap value or mid-cap momentum. Having material exposure across the size spectrum helps diversify the drivers of return: mega-caps often track big macro stories, while smaller names are more tied to company-specific or niche trends. The tradeoff is bumpier short-term performance.
True holdings
-
NV NVIDIA Corporation 2.53%
Part of fund(s):- Schwab U.S. Large-Cap Growth ETF
- Vanguard Total Stock Market Index Fund ETF Shares
-
AA Apple Inc 2.27%
Part of fund(s):- Schwab U.S. Large-Cap Growth ETF
- Vanguard Total Stock Market Index Fund ETF Shares
-
LL Eli Lilly and Company 2.20%
Part of fund(s):- Schwab U.S. Large-Cap Growth ETF
- Vanguard Health Care Index Fund ETF Shares
-
MS Microsoft Corporation 1.73%
Part of fund(s):- Schwab U.S. Large-Cap Growth ETF
- Vanguard Total Stock Market Index Fund ETF Shares
-
LM Lockheed Martin Corporation 1.30%
Part of fund(s):- Global X Defense Tech ETF
-
JN Johnson & Johnson 1.25%
Part of fund(s):- Vanguard Health Care Index Fund ETF Shares
-
AM Amazon.com Inc 1.23%
Part of fund(s):- Schwab U.S. Large-Cap Growth ETF
- Vanguard Total Stock Market Index Fund ETF Shares
-
RT Raytheon Technologies Corp 1.12%
Part of fund(s):- Global X Defense Tech ETF
-
GO Alphabet Inc Class A 1.07%
Part of fund(s):- Schwab U.S. Large-Cap Growth ETF
- Vanguard Total Stock Market Index Fund ETF Shares
-
GD General Dynamics Corporation 1.02%
Part of fund(s):- Global X Defense Tech ETF
- Top 10 total 15.71%
Looking through the ETFs’ top holdings, a few large names show up multiple times: NVIDIA, Apple, Microsoft, Amazon, and Alphabet together form a noticeable cluster. On top of that, there’s meaningful exposure to defense contractors like Lockheed Martin, Raytheon, and General Dynamics, plus healthcare leaders such as Eli Lilly and Johnson & Johnson. Overlap is only measured from ETF top-10 lists, so real duplication is likely higher. This kind of hidden concentration means that a shock to mega-cap US tech or to defense and healthcare could ripple through several funds at once. It’s not necessarily bad, but it does tilt the portfolio toward those specific corporate “winners.”
Factors
On factors, the standout tilt is toward value, with a high value exposure of 66%. Factor exposure describes how much a portfolio leans into characteristics like cheapness (value) or recent winners (momentum) that research links to long-term returns. A high value tilt means a stronger emphasis on stocks trading at lower prices relative to fundamentals, supported here mainly by the small-cap value ETF. Other factors are close to neutral, so this isn’t an extreme multi-factor bet. Value-tilted portfolios often lag during growth-led booms but can shine when markets rotate toward cheaper, more cash-generative businesses. Staying patient is important, as value cycles can stretch over several years.
Risk contribution
-
Invesco S&P MidCap Momentum ETF
Weight: 14.28% 17.3% -
Avantis® U.S. Small Cap Value ETF
Weight: 14.28% 17.1% -
Schwab U.S. Large-Cap Growth ETF
Weight: 14.28% 15.9% -
WisdomTree Japan Hedged Equity Fund
Weight: 14.28% 14.7% -
Vanguard Total Stock Market Index Fund ETF Shares
Weight: 14.32% 14.0% - Top 5 risk contribution 79.0%
Risk contribution shows how much each holding adds to total portfolio ups and downs, which can differ from its simple weight. Here, the mid-cap momentum and small-cap value ETFs each contribute about 17% of total risk despite 14% weights, meaning they punch a bit above their size due to higher volatility. The broad US market and Japan funds contribute slightly less risk than their weights, acting as stabilizers in relative terms. The top three risk contributors together drive just over half of the portfolio’s total volatility, which is a moderate but noticeable concentration. Adjusting those higher-risk funds’ allocations would be the main lever to change overall risk without altering the fund lineup.
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.
On the risk–return chart, the current portfolio has a Sharpe ratio of 1.29, below the optimal mix’s 2.13 and slightly above the minimum-variance portfolio. The efficient frontier shows the best expected return for each risk level using just these existing funds. Being 9.6 percentage points below the frontier at the current risk means the same ETFs could be rearranged to target much better risk-adjusted performance. In other words, the ingredients are solid, but the proportions aren’t yet as efficient as they could be. Reweighting toward the optimal or a same-risk optimized mix could meaningfully boost expected return per unit of volatility without adding new products.
Dividends
- Avantis® U.S. Small Cap Value ETF 1.40%
- WisdomTree Japan Hedged Equity Fund 1.20%
- Schwab U.S. Large-Cap Growth ETF 0.30%
- Global X Defense Tech ETF 0.30%
- Vanguard Health Care Index Fund ETF Shares 1.80%
- Vanguard Total Stock Market Index Fund ETF Shares 1.20%
- Invesco S&P MidCap Momentum ETF 0.70%
- Weighted yield (per year) 0.99%
The overall dividend yield is just under 1%, with slightly higher yields in healthcare and small value, and very low yields in growth and thematic areas. Dividend yield is the yearly cash payout as a percentage of the investment value, helpful for those needing regular income. Here, the focus is clearly on growth and capital appreciation rather than income generation. That aligns well with investors who are still in the accumulation phase and can reinvest any dividends. If reliable cash flow were a priority, this yield level would likely feel light, and more income-oriented strategies or separate income holdings might be needed to support regular withdrawals.
Ongoing product costs
- Avantis® U.S. Small Cap Value ETF 0.25%
- WisdomTree Japan Hedged Equity Fund 0.48%
- Schwab U.S. Large-Cap Growth ETF 0.04%
- Global X Defense Tech ETF 0.50%
- Vanguard Health Care Index Fund ETF Shares 0.10%
- Vanguard Total Stock Market Index Fund ETF Shares 0.03%
- Invesco S&P MidCap Momentum ETF 0.34%
- Weighted costs total (per year) 0.25%
The weighted ongoing fee (TER) is about 0.25%, which is competitive given the mix of broad index funds and specialized ETFs. Ultra-low-cost core holdings from Vanguard and Schwab bring the average down, offsetting the higher fees from the Japan, defense, and momentum funds. Costs compound quietly in the background, so keeping them low leaves more of the return in your pocket over time. This setup strikes a solid balance: you’re paying a bit more for targeted tilts and themes, but the overall cost level is still modest by industry standards. That’s a strong positive for long-term performance, especially versus similarly complex portfolios with higher expense ratios.
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