Balanced Portfolio with Broad Diversification and High Exposure to Technology and North America

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

What type of investor this portfolio is suitable for

Balanced Investors

This portfolio is suitable for investors with a balanced risk appetite, seeking growth with moderate volatility. Typically, such investors have a medium to long-term investment horizon and are comfortable with some market fluctuations. They aim for capital appreciation rather than immediate income, leveraging broad market exposure for potential gains. While they prioritize growth, they also appreciate the importance of diversification to manage risk. This investor type values cost efficiency and is open to exploring opportunities for optimization within their portfolio.

Positions

  • Vanguard S&P 500 ETF
    VOO - US9229083632
    69.57%
  • Vanguard Total International Stock Index Fund ETF Shares
    VXUS - US9219097683
    19.10%
  • Invesco QQQ Trust
    QQQ - US46090E1038
    10.51%
  • Invesco NASDAQ 100 ETF
    QQQM - US46138G6492
    0.82%

This portfolio is heavily weighted towards equities, with a significant portion allocated to the Vanguard S&P 500 ETF, making up nearly 70% of the total. The remaining investments are split among the Vanguard Total International Stock Index Fund ETF Shares and two Invesco ETFs, with minor allocations. This composition indicates a strong focus on large-cap U.S. equities, with a smaller portion dedicated to international exposure. Such a setup provides broad market exposure but leans heavily on U.S. stocks, which could limit benefits from global diversification.

Growth Info

The historical performance of this portfolio has been impressive, achieving a compound annual growth rate (CAGR) of 14.19%. Despite a maximum drawdown of -26.2%, the portfolio has shown resilience and recovery potential. The performance is concentrated, with 90% of returns coming from just 19 days. This highlights the importance of staying invested to capture these significant gains. Such performance indicates strong potential for future growth, although the volatility should be considered when assessing risk tolerance.

Projection Info

A Monte-Carlo simulation, which uses random sampling to project potential future outcomes, was conducted on this portfolio. With 1,000 simulations, the portfolio showed a median return of 489.99% over the investment horizon. The 5th percentile yielded a return of 54.13%, while the 67th percentile reached 719.33%. These projections demonstrate a wide range of potential outcomes, emphasizing the importance of understanding the inherent risks and rewards. The high likelihood of positive returns suggests a favorable outlook, but investors should remain aware of the uncertainties involved.

Asset classes Info

  • Stocks
    100%
  • Cash
    0%
  • Other
    0%
  • No data
    0%

The portfolio is almost entirely composed of stocks, with a negligible allocation to cash and other asset classes. This high equity exposure suggests a growth-oriented strategy, which can offer significant returns but also comes with increased volatility. With such a concentrated allocation, it's crucial to consider the potential risks associated with market fluctuations. To mitigate these risks, investors might consider diversifying into other asset classes, like bonds, to create a more balanced risk-return profile.

Sectors Info

  • Technology
    31%
  • Financials
    13%
  • Consumer Discretionary
    11%
  • Health Care
    10%
  • Telecommunications
    9%
  • Industrials
    9%
  • Consumer Staples
    6%
  • Energy
    3%
  • Basic Materials
    3%
  • Utilities
    3%
  • Real Estate
    2%

Sector allocation within this portfolio is heavily skewed towards technology, accounting for over 31% of the total. Other sectors like financial services, consumer cyclicals, and healthcare also have significant representation. While technology has been a strong performer, this concentration can increase vulnerability to sector-specific downturns. A more balanced sector allocation could enhance diversification and reduce risk. Investors should assess their comfort with potential sector volatility and consider adjustments to achieve a more diversified sector exposure.

Regions Info

  • North America
    82%
  • Europe Developed
    8%
  • Asia Emerging
    3%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    0%
  • Europe Emerging
    0%

Geographically, the portfolio is predominantly invested in North America, with over 81% allocation, followed by smaller positions in Europe and Asia. This concentration in U.S. markets provides strong exposure to a stable and mature economy but may limit benefits from growth in emerging markets. To enhance geographic diversification, investors might consider increasing allocations to other regions. This approach could help capture growth opportunities in diverse markets and reduce reliance on the U.S. economy.

Redundant positions Info

  • Invesco NASDAQ 100 ETF
    Invesco QQQ Trust
    Vanguard S&P 500 ETF
    High correlation

The portfolio contains highly correlated assets, particularly among the Invesco NASDAQ 100 ETF, Invesco QQQ Trust, and Vanguard S&P 500 ETF. This high correlation suggests limited diversification benefits, as these assets tend to move in the same direction. Reducing overlap by selecting non-correlated assets could enhance diversification and reduce risk. By carefully analyzing asset correlations, investors can achieve a more balanced portfolio that better withstands market volatility and enhances potential returns.

Dividends Info

  • Invesco QQQ Trust 0.60%
  • Invesco NASDAQ 100 ETF 0.60%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.00%
  • Weighted yield (per year) 1.48%

The portfolio's dividend yield stands at 1.48%, with the Vanguard Total International Stock Index Fund ETF Shares contributing the highest yield of 3.0%. This moderate yield provides some income potential, which can be appealing for investors seeking regular cash flow. However, the focus remains on growth rather than income. Investors interested in boosting their portfolio's income might explore higher-yielding assets. Balancing growth and income needs is essential to align with financial goals and risk tolerance.

Ongoing product costs Info

  • Invesco QQQ Trust 0.20%
  • Invesco NASDAQ 100 ETF 0.15%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.06%

The portfolio's total expense ratio is a low 0.06%, indicating cost efficiency. The Vanguard S&P 500 ETF, with an expense ratio of 0.03%, is particularly cost-effective. Keeping investment costs low is crucial for maximizing returns over time, as high fees can erode gains. This portfolio's low costs are a strength, allowing more of the investment's returns to compound over time. Investors should continue to monitor and maintain low-cost investments to ensure efficient portfolio management.

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.

Before optimizing the portfolio, addressing asset overlap is crucial. Highly correlated assets offer limited diversification benefits and should be reconsidered. By reducing overlap, investors can improve diversification and potentially enhance returns. Moving along the efficient frontier, they can achieve a riskier or more conservative portfolio by adjusting asset allocation. For a riskier profile, increase equity exposure; for a conservative approach, incorporate more bonds. Once overlap issues are resolved, optimization can further refine the portfolio to align with specific risk and return objectives.

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