A balanced portfolio with strong U.S. focus and moderate dividend income

Report created on Dec 27, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

This portfolio consists predominantly of ETFs, with a significant allocation to the Invesco NASDAQ 100 ETF at 35%. The remaining allocations are distributed among the Schwab U.S. Dividend Equity ETF, iShares Select Dividend ETF, iShares Russell 2000 ETF, and Vanguard FTSE All-World ex-US Index Fund ETF Shares. This composition reflects a balanced approach, with a tilt towards growth and income. Compared to common benchmarks, this portfolio is heavily weighted in U.S. equities, which may limit exposure to global opportunities. Consider diversifying further to capture potential gains from international markets.

Growth Info

The portfolio has demonstrated strong historical performance, with a CAGR of 13.69%, indicating robust growth over time. However, the maximum drawdown of -24.06% suggests that the portfolio has experienced significant volatility. This performance, while impressive, should be viewed with caution as past results do not guarantee future outcomes. Comparing this to benchmark indices, the portfolio has outperformed many, but the volatility risk remains. To mitigate potential downturns, consider strategies that balance growth with stability, such as incorporating more defensive assets.

Projection Info

The Monte Carlo simulation provides a forward-looking analysis, projecting a wide range of potential outcomes. With 1,000 simulations, the portfolio shows a median growth of 399.02%, but with a 5th percentile at 63.24%, indicating potential for lower returns. The annualized return across simulations is 13.54%. It's important to note that these projections are based on historical data and assumptions, which may not hold true in the future. To enhance confidence in future performance, regularly review and adjust the portfolio to align with evolving market conditions and personal goals.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily concentrated in stocks, accounting for 99.54% of its composition, with minimal allocations to cash and other assets. This high equity exposure can drive growth but also increases risk during market downturns. Compared to diversified benchmarks, this portfolio lacks balance across asset classes. To improve diversification, consider incorporating fixed income or alternative investments, which can provide stability and reduce overall volatility. A more balanced asset class mix can enhance resilience against market fluctuations.

Sectors Info

  • Technology
    25%
  • Financials
    14%
  • Consumer Discretionary
    12%
  • Health Care
    9%
  • Telecommunications
    9%
  • Industrials
    8%
  • Consumer Staples
    8%
  • Utilities
    6%
  • Energy
    5%
  • Basic Materials
    3%
  • Real Estate
    2%

The sectoral allocation reveals a strong emphasis on technology, which comprises nearly 25% of the portfolio. Other significant sectors include financial services, consumer cyclicals, and healthcare. This sector concentration can lead to higher volatility, particularly if market conditions negatively impact these industries. Benchmark comparisons suggest that this allocation is tech-heavy, which may benefit from technological advancements but also poses risks during interest rate hikes. To mitigate sector-specific risks, consider rebalancing towards a more evenly distributed sector allocation.

Regions Info

  • North America
    85%
  • Europe Developed
    7%
  • Asia Emerging
    3%
  • Japan
    2%
  • Asia Developed
    2%
  • Australasia
    1%
  • Latin America
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is predominantly focused on North America, with 84.57% exposure, and limited allocations to other regions. This geographic concentration can limit diversification benefits and expose the portfolio to regional economic risks. Compared to global benchmarks, this portfolio underrepresents emerging markets, which may offer growth potential. To enhance geographic diversification, consider increasing exposure to international markets, particularly in regions with emerging economies, to capture broader economic trends and opportunities.

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 using the Efficient Frontier, which seeks the best possible risk-return ratio based on current assets. This method helps identify the optimal allocation that maximizes returns for a given level of risk or minimizes risk for a desired return. While the current portfolio is well-structured, exploring optimization could reveal opportunities for improvement. Consider adjusting allocations among existing assets to enhance efficiency. Remember, optimization is about achieving the best balance of risk and return, not necessarily diversification.

Dividends Info

  • iShares Select Dividend ETF 2.60%
  • iShares Russell 2000 ETF 1.10%
  • Invesco NASDAQ 100 ETF 0.40%
  • Schwab U.S. Dividend Equity ETF 3.60%
  • Vanguard FTSE All-World ex-US Index Fund ETF Shares 1.60%
  • Weighted yield (per year) 1.66%

The portfolio's dividend yield stands at 1.66%, primarily driven by the Schwab U.S. Dividend Equity ETF and iShares Select Dividend ETF. These dividends contribute to the portfolio's overall returns, providing a steady income stream. For investors seeking income, this yield is a positive aspect, although it may not be sufficient for those relying heavily on dividends. To enhance income potential, consider increasing allocation to higher-yielding assets or exploring dividend-focused strategies. Balancing growth and income can support both capital appreciation and cash flow needs.

Ongoing product costs Info

  • iShares Select Dividend ETF 0.38%
  • iShares Russell 2000 ETF 0.19%
  • Invesco NASDAQ 100 ETF 0.15%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Vanguard FTSE All-World ex-US Index Fund ETF Shares 0.07%
  • Weighted costs total (per year) 0.16%

The portfolio's total expense ratio (TER) is a low 0.16%, which is commendable and supports better long-term performance. Lower costs mean more of your returns are retained, contributing positively to compounding growth. Compared to industry averages, this cost structure is highly efficient. Maintaining low costs should remain a priority, as reducing fees is one of the most effective ways to enhance net returns. Regularly review the expense ratios of your holdings and consider replacing high-cost assets with more cost-effective alternatives if necessary.

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