Balanced Broadly Diversified Portfolio with Strong International Exposure and Moderate Costs

Report created on Dec 3, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio is primarily composed of ETFs, with a significant allocation to the Vanguard Total International Stock Index Fund ETF Shares, making up 64.33% of the portfolio. This indicates a strong preference for international exposure. The VanEck Uranium+Nuclear Energy ETF comprises 25.51%, showing a thematic investment in energy. The Vanguard S&P 500 ETF and First Trust NASDAQ Cybersecurity ETF make up smaller portions, indicating a focus on large-cap U.S. equities and technology. Overall, the portfolio is broadly diversified across different sectors and geographies, aligning with a balanced risk profile.

Growth Info

Historically, the portfolio has delivered a compound annual growth rate (CAGR) of 9.18%, which is quite respectable. However, it has also experienced a maximum drawdown of -33.74%, reflecting the potential for significant losses during market downturns. This performance suggests a balanced approach, with the potential for growth but also exposure to volatility. It highlights the importance of maintaining a long-term perspective to weather market fluctuations. To enhance performance, consider reviewing asset allocations to ensure alignment with risk tolerance and investment goals.

Projection Info

Using a Monte Carlo simulation with 1,000 iterations, the portfolio's forward projection shows a wide range of potential outcomes. The 5th percentile indicates a 38.54% return, while the 50th percentile shows a 396.1% return, and the 67th percentile projects a 585.41% return. The annualized return across all simulations is 13.73%. Monte Carlo simulations provide insights into the variability of future returns, emphasizing the importance of diversification to mitigate risks. To optimize future outcomes, consider periodic rebalancing to maintain the desired risk-return profile.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio is heavily weighted in stocks, accounting for 98.80% of the allocation. A small portion is held in cash and other assets, providing minimal liquidity and diversification benefits. This concentration in equities aligns with a growth-oriented strategy but exposes the portfolio to market volatility. Diversifying across asset classes, such as bonds or real assets, can help reduce risk and provide stability during market downturns. Consider evaluating the overall asset allocation to ensure it aligns with long-term investment objectives and risk tolerance.

Sectors Info

  • Energy
    15%
  • Financials
    14%
  • Industrials
    14%
  • Technology
    13%
  • Utilities
    13%
  • Consumer Discretionary
    8%
  • Health Care
    7%
  • Basic Materials
    5%
  • Consumer Staples
    5%
  • Telecommunications
    4%
  • Real Estate
    2%

The portfolio is diversified across multiple sectors, with significant allocations to energy, financial services, industrials, and technology. This diversification helps mitigate sector-specific risks and provides exposure to various economic cycles. However, the concentration in certain sectors may expose the portfolio to cyclical fluctuations. To enhance sector diversification, consider periodically reviewing sector allocations and adjusting as needed to maintain a balanced approach. This can help optimize returns and minimize the impact of sector-specific downturns on the overall portfolio.

Regions Info

  • North America
    32%
  • Europe Developed
    28%
  • Asia Emerging
    12%
  • Japan
    10%
  • Asia Developed
    7%
  • Australasia
    5%
  • Africa/Middle East
    2%
  • Europe Emerging
    1%
  • Latin America
    1%

Geographically, the portfolio has a diverse allocation, with significant exposure to North America, Europe Developed, and Asia Emerging. This broad geographic diversification helps mitigate region-specific risks and provides access to growth opportunities across different markets. However, the concentration in developed regions may limit exposure to emerging markets' potential growth. To enhance geographic diversification, consider regularly reviewing regional allocations and adjusting as needed to capture opportunities in underrepresented regions while maintaining a balanced risk profile.

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 can be optimized by moving along the efficient frontier to achieve a higher expected return of 15.13% at the same risk level. This involves adjusting asset allocations to enhance the portfolio's efficiency. However, if the current risk level is satisfactory, focusing on maintaining diversification and managing costs may be more beneficial. For those seeking a riskier portfolio, increasing exposure to higher-growth assets can be considered. Conversely, for a more conservative approach, incorporating more stable assets like bonds may help reduce risk.

Dividends Info

  • First Trust NASDAQ Cybersecurity ETF 0.40%
  • VanEck Uranium+Nuclear Energy ETF 3.50%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.00%
  • Weighted yield (per year) 2.93%

The portfolio generates a total dividend yield of 2.93%, with notable contributions from the Vanguard Total International Stock Index Fund ETF Shares and the VanEck Uranium+Nuclear Energy ETF. This yield provides a steady income stream, enhancing the portfolio's total return. Dividends can be an important component of a balanced portfolio, offering stability during market volatility. To optimize dividend income, consider periodically reviewing the yield and making adjustments to maintain a consistent income stream while aligning with overall investment objectives.

Ongoing product costs Info

  • First Trust NASDAQ Cybersecurity ETF 0.59%
  • VanEck Uranium+Nuclear Energy ETF 0.61%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.22%

The portfolio's total expense ratio (TER) is 0.22%, which is relatively low and helps maximize net returns. The Vanguard S&P 500 ETF and Vanguard Total International Stock Index Fund ETF Shares have particularly low costs, contributing to the overall cost-efficiency. Managing investment costs is crucial for optimizing returns over the long term. To maintain cost-effectiveness, consider regularly reviewing the expense ratios of the portfolio's holdings and exploring opportunities to reduce costs further. This can enhance overall portfolio performance and align with financial goals.

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