A balanced portfolio with strong U.S. focus and moderate diversification

Report created on Mar 18, 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 is heavily weighted towards equities, with 95% in stocks and 5% in bonds. The Vanguard S&P 500 ETF holds the largest share at 40%, followed by the Invesco NASDAQ 100 ETF at 30%. This composition suggests a focus on large-cap U.S. equities, providing exposure to established companies. Compared to a typical balanced benchmark, this portfolio leans more towards equities, which may offer higher potential returns but also increased risk. Consider diversifying further by increasing bond allocation to reduce volatility, especially in uncertain market conditions.

Growth Info

Historically, the portfolio has delivered a strong CAGR of 12.42%, indicating robust growth over time. However, it experienced a maximum drawdown of -26.46%, highlighting potential vulnerability during market downturns. Compared to a balanced benchmark, this performance suggests higher volatility. The high growth rate is promising, but the drawdown underscores the importance of risk management. To mitigate future risks, consider incorporating more defensive assets or increasing cash reserves to cushion against potential market dips.

Projection Info

The Monte Carlo simulation, using historical data, projects a wide range of potential outcomes. With a 50th percentile return of 251.8%, the median scenario suggests significant growth. However, the 5th percentile at 30.9% highlights downside risk. While simulations offer valuable insights, they rely on past data and do not guarantee future results. To enhance confidence in future projections, regularly review and adjust the portfolio based on changing market conditions and personal goals. Consider consulting with a financial advisor for personalized strategies.

Asset classes Info

  • Stocks
    95%
  • Bonds
    5%

The portfolio's heavy allocation to stocks, at 95%, indicates a strong growth orientation. The 5% bond allocation provides limited income and stability, which may not be sufficient for conservative investors. Compared to a typical balanced benchmark, this allocation is more aggressive. Diversification across asset classes can help manage risk and improve returns. Consider increasing exposure to bonds or alternative investments to balance potential volatility and provide a more stable income stream, especially during market fluctuations.

Sectors Info

  • Technology
    32%
  • Consumer Discretionary
    11%
  • Financials
    10%
  • Telecommunications
    10%
  • Health Care
    9%
  • Industrials
    7%
  • Consumer Staples
    6%
  • Energy
    3%
  • Utilities
    2%
  • Basic Materials
    2%
  • Real Estate
    2%

Sector allocation shows a significant concentration in technology at 32%, followed by consumer cyclicals and financial services. This tech-heavy focus may lead to higher volatility, especially during interest rate hikes or tech sector downturns. Compared to a diversified benchmark, this portfolio is more concentrated. Balancing sector exposure by increasing allocation to underrepresented sectors like utilities or healthcare can enhance stability and reduce risk. Regularly reviewing sector trends and adjusting allocations can help maintain a balanced approach.

Regions Info

  • North America
    86%
  • Europe Developed
    4%
  • Asia Emerging
    2%
  • Japan
    1%
  • Asia Developed
    1%

With 86% exposure to North America, the portfolio is heavily skewed towards the U.S. market. This concentration may limit diversification benefits and increase vulnerability to regional economic shifts. Compared to a global benchmark, the portfolio is underexposed to international markets. To enhance diversification, consider increasing allocations to Europe, Asia, or emerging markets. This can reduce reliance on the U.S. economy and capture growth opportunities in other regions. Regularly assess geopolitical risks and adjust geographic exposure accordingly.

Market capitalization Info

  • Mega-cap
    41%
  • Large-cap
    33%
  • Mid-cap
    16%
  • Small-cap
    4%
  • Micro-cap
    1%

The portfolio is predominantly invested in mega and big-cap stocks, comprising 74% of the allocation. This focus on larger companies offers stability and lower risk compared to small or micro-cap stocks. However, it may limit growth potential. Compared to a diversified benchmark, the portfolio is less exposed to smaller companies. To capture higher growth opportunities, consider increasing allocations to medium or small-cap stocks. This can enhance diversification and provide access to emerging companies with strong growth prospects.

Redundant positions Info

  • iShares Core Dividend Growth ETF
    Schwab U.S. Dividend Equity ETF
    High correlation

The portfolio includes highly correlated assets, particularly the iShares Core Dividend Growth ETF and Schwab U.S. Dividend Equity ETF. High correlation means these assets often move in tandem, reducing diversification benefits. During market downturns, this can amplify risk. To improve diversification, consider replacing one of these ETFs with a less correlated asset that complements the overall strategy. This can help manage risk and enhance returns by ensuring the portfolio benefits from a broader range of market movements.

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 be optimized using the Efficient Frontier, focusing on the best possible risk-return ratio. Currently, it may not be fully optimized due to overlapping assets and sector concentration. The Efficient Frontier suggests reallocating within existing assets to achieve a more efficient portfolio. Consider reviewing asset allocations and adjusting weights to align with the optimal risk-return balance. This process can enhance returns without increasing risk, ensuring the portfolio is well-positioned to achieve long-term goals.

Dividends Info

  • Vanguard Total Bond Market Index Fund ETF Shares 3.70%
  • iShares Core Dividend Growth ETF 2.20%
  • Invesco NASDAQ 100 ETF 0.60%
  • Schwab U.S. Dividend Equity ETF 3.60%
  • Vanguard Small-Cap Index Fund ETF Shares 1.40%
  • Vanguard FTSE All-World ex-US Index Fund ETF Shares 1.10%
  • Vanguard S&P 500 ETF 1.30%
  • Weighted yield (per year) 1.36%

The portfolio's dividend yield is 1.36%, with contributions from several ETFs. This yield provides a modest income stream, which can be beneficial for investors seeking regular income. Compared to a typical income-focused portfolio, the yield is moderate. To enhance income potential, consider increasing allocations to higher-yielding assets or dividend-focused ETFs. This can provide a more substantial income stream while maintaining growth potential. Regularly review dividend policies and market conditions to optimize income generation.

Ongoing product costs Info

  • Vanguard Total Bond Market Index Fund ETF Shares 0.03%
  • iShares Core Dividend Growth ETF 0.08%
  • Invesco NASDAQ 100 ETF 0.15%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Vanguard Small-Cap Index Fund ETF Shares 0.05%
  • Vanguard FTSE All-World ex-US Index Fund ETF Shares 0.07%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.07%

The portfolio's total expense ratio (TER) is 0.07%, which is impressively low and supports better long-term performance. Lower costs mean more of the returns are retained, enhancing overall growth. Compared to industry averages, this TER is highly competitive. Maintaining low costs is crucial for maximizing returns. Continue to monitor and compare expense ratios across similar investment options to ensure cost efficiency. Consider reallocating to lower-cost alternatives if available, without compromising on performance or diversification.

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