A balanced portfolio with strong growth potential and moderate geographic diversification

Report created on Dec 21, 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 composed primarily of ETFs, with a significant allocation to stocks at 66.6%, followed by bonds, cash, and real estate. This composition aligns with a balanced investment strategy, providing a mix of growth and income potential. It's notable that the portfolio is broadly diversified across asset classes, which can help mitigate risk. Compared to common benchmarks, this allocation is well-balanced, though the cash allocation is slightly higher than typical balanced portfolios. Consider reviewing the cash position to ensure it aligns with your liquidity needs and long-term goals.

Growth Info

Historically, the portfolio has performed well with a Compound Annual Growth Rate (CAGR) of 11.74%. This indicates strong growth over time, outperforming many traditional benchmarks. However, the maximum drawdown of -28.83% highlights potential volatility, a common trait in equity-heavy portfolios. While past performance is not indicative of future results, understanding these trends can help set realistic expectations. To maintain or enhance performance, consider regularly reviewing asset allocations and market conditions to ensure they align with your investment objectives.

Projection Info

Forward projections using Monte Carlo simulations show a median potential growth of 205.2%, with a 67th percentile outcome of 296.23%. These simulations use historical data to predict future outcomes, but it's important to remember that they cannot guarantee results. The simulations indicate a high likelihood of positive returns, with 954 out of 1,000 scenarios showing gains. To improve future performance, consider adjusting allocations based on changing market conditions and personal risk tolerance, while acknowledging the inherent uncertainties in projections.

Asset classes Info

  • Stocks
    67%
  • Bonds
    13%
  • Cash
    10%
  • Real Estate
    10%

The portfolio's allocation across asset classes includes a dominant 66.6% in stocks, with bonds, cash, and real estate providing additional diversification. This allocation is typical for a balanced portfolio, offering growth potential while managing risk. Compared to benchmarks, the real estate allocation is slightly higher, which can provide a hedge against inflation. Consider periodically reassessing the balance between asset classes, especially if market conditions or personal circumstances change, to ensure the portfolio continues to meet your investment goals.

Sectors Info

  • Technology
    21%
  • Real Estate
    12%
  • Financials
    9%
  • Consumer Discretionary
    8%
  • Health Care
    7%
  • Industrials
    6%
  • Telecommunications
    6%
  • Consumer Staples
    3%
  • Energy
    2%
  • Basic Materials
    2%
  • Utilities
    2%

Sector allocation shows a notable concentration in technology at 20.5%, followed by real estate and financial services. This tech-heavy focus may lead to higher volatility, especially during periods of interest rate changes. While this concentration can drive growth, it's important to balance it with exposure to other sectors. The presence of real estate and financial services adds diversification, but consider evaluating sector weights to avoid overexposure to any single area. Regularly reviewing sector trends can help optimize the portfolio’s risk-return profile.

Regions Info

  • North America
    63%
  • Europe Developed
    6%
  • Asia Emerging
    2%
  • Japan
    2%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is heavily weighted towards North America at 63%, with limited exposure to emerging markets. This reflects a common home bias, which can reduce international diversification benefits. While North American markets offer growth potential, consider increasing exposure to underrepresented regions like Asia or Europe to enhance diversification. This can help mitigate country-specific risks and capture growth opportunities in diverse economies. Regularly reviewing geographic allocations can ensure the portfolio remains aligned with global market trends and your investment objectives.

Redundant positions Info

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

The portfolio contains highly correlated assets, particularly between the Schwab U.S. Large-Cap Growth ETF and the Vanguard Total Stock Market Index Fund ETF Shares. Correlated assets tend to move together, which can limit diversification benefits during market downturns. While some correlation is expected, consider reducing overlap by diversifying into less correlated assets. This can enhance the portfolio's risk management and improve its resilience in volatile markets. Regularly reviewing correlations can help maintain an optimal balance between risk and return.

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, which balances risk and return by adjusting asset allocations. Currently, reducing highly correlated assets like Schwab U.S. Large-Cap Growth ETF and Vanguard Total Stock Market Index Fund ETF Shares can enhance diversification. The Efficient Frontier helps identify the best possible risk-return ratio for the existing assets. Consider periodic optimization reviews to ensure the portfolio remains aligned with your risk tolerance and investment goals. Remember, efficiency is about maximizing returns for a given level of risk, not necessarily achieving diversification.

Dividends Info

  • Vanguard Long-Term Bond Index Fund ETF Shares 4.60%
  • Direxion Auspice Broad Commodity Strategy ETF 3.30%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • WisdomTree Bloomberg U.S. Dollar Bullish Fund 6.20%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.90%
  • Vanguard Total International Stock Index Fund ETF Shares 1.60%
  • The Real Estate Select Sector SPDR Fund 2.40%
  • Weighted yield (per year) 1.93%

The portfolio's dividend yield stands at 1.93%, providing a moderate income stream. This is beneficial for investors seeking both growth and income. The WisdomTree Bloomberg U.S. Dollar Bullish Fund offers the highest yield at 6.2%, contributing significantly to overall returns. While dividends can enhance income, they should not be the sole focus. Consider balancing the need for income with growth potential by maintaining a diversified mix of high-yield and growth-oriented assets. Regularly reviewing dividend contributions can help optimize the portfolio's income strategy.

Ongoing product costs Info

  • Vanguard Long-Term Bond Index Fund ETF Shares 0.04%
  • Direxion Auspice Broad Commodity Strategy ETF 0.80%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • WisdomTree Bloomberg U.S. Dollar Bullish Fund 0.50%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • The Real Estate Select Sector SPDR Fund 0.09%
  • Weighted costs total (per year) 0.16%

The total expense ratio (TER) of the portfolio is a low 0.16%, which is advantageous for long-term performance. Low costs mean more of your returns stay in your pocket, enhancing compounding over time. The Vanguard and Schwab ETFs contribute to this low-cost structure with their minimal fees. This efficient cost management aligns with best practices and supports better net returns. Consider continuing to prioritize low-cost investment options, as high fees can erode returns significantly over time. Regularly reviewing costs can ensure the portfolio remains cost-effective.

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