A conservative portfolio with gold and treasury focus providing stable returns and low costs

Report created on Dec 20, 2024

Risk profile Info

2/7
Conservative
Less risk More risk

Diversification profile Info

1/5
Single-Focused
Less diversification More diversification

Positions

This portfolio is composed of five ETFs, each holding 20% of the total. It includes gold, U.S. equities, and both long-term and short-term U.S. Treasuries, alongside a dividend-focused equity fund. This balanced allocation reflects a conservative investment strategy, aiming to provide stability and moderate growth. Compared to common benchmarks, the portfolio's composition leans heavily on fixed-income and gold, which typically offer safety but may limit growth potential. To enhance diversification, consider integrating a broader range of asset types or increasing equity exposure for growth.

Growth Info

Historically, the portfolio has achieved a Compound Annual Growth Rate (CAGR) of 7.23%, indicating steady growth over time. This performance is notable given the conservative risk profile, which prioritizes capital preservation. The maximum drawdown of -19.17% highlights its resilience during market downturns, especially when compared to more aggressive portfolios. While past performance is not indicative of future results, maintaining a diversified approach with low-volatility assets can continue to mitigate risks. Regularly reviewing and adjusting the asset mix can help sustain performance.

Projection Info

Monte Carlo simulations, which use historical data to project future outcomes, suggest a potential annualized return of 7.42%. Despite the limitations of relying on past data, these projections offer a useful glimpse into possible future scenarios. The simulations indicate a high likelihood of positive returns, with 956 out of 1,000 simulations showing gains. While the 5th percentile suggests a modest return of 3.23%, the median projection of 148.6% growth over a given period is promising. Regularly revisiting projections can help align the portfolio with evolving financial goals.

Asset classes Info

  • Stocks
    40%
  • Bonds
    40%
  • Other
    20%

The portfolio's asset allocation is evenly split between stocks and bonds, with a significant 20% in gold, classified as "Other." This distribution reflects a conservative approach, focusing on capital preservation and income generation. Compared to global benchmarks, the portfolio's emphasis on fixed-income securities and gold suggests lower risk but potentially lower returns. To enhance growth, consider gradually increasing equity exposure while maintaining a balance with other asset classes to manage risk effectively.

Sectors Info

  • Technology
    12%
  • Financials
    7%
  • Health Care
    5%
  • Industrials
    4%
  • Consumer Discretionary
    4%
  • Consumer Staples
    3%
  • Telecommunications
    2%
  • Energy
    1%
  • Basic Materials
    1%
  • Utilities
    1%

Sector allocation reveals a diverse spread across technology, financial services, and healthcare, among others. However, the portfolio's sectoral exposure is relatively limited, with no sector exceeding 12%. This balance aligns with conservative investment strategies, reducing the impact of sector-specific volatility. To capitalize on sector trends, consider selectively increasing exposure to sectors with strong growth potential. Monitoring sector performance and adjusting allocations can help optimize returns while maintaining risk levels.

Regions Info

  • North America
    40%

Geographic exposure is heavily concentrated in North America, accounting for nearly 40% of the portfolio. Limited exposure to Europe and Asia suggests an opportunity to enhance diversification. By incorporating more international assets, the portfolio could potentially benefit from global growth opportunities and reduce geographic risk. While U.S. markets have been robust, diversifying geographically can provide a hedge against regional downturns. Evaluating global economic trends and adjusting geographic allocations can strengthen the portfolio's resilience.

Redundant positions Info

  • SPDR S&P 500 ETF Trust
    Vanguard Dividend Appreciation Index Fund ETF Shares
    High correlation

The portfolio's assets show some correlation, particularly between the SPDR S&P 500 ETF Trust and the Vanguard Dividend Appreciation Index Fund ETF Shares. High correlation among assets can limit diversification benefits, especially during market downturns. Diversifying into less correlated assets can enhance risk management and improve overall portfolio stability. Consider reducing holdings in overlapping assets and exploring alternative investments that offer lower correlation to existing positions.

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's current asset allocation could be optimized using the Efficient Frontier concept, which identifies the best risk-return ratio. However, the presence of highly correlated assets suggests room for improvement. By reducing overlap and reallocating toward less correlated investments, the portfolio could achieve a more efficient risk-return balance. Regularly reviewing and adjusting allocations can help maintain an optimal portfolio structure, aligning with both risk tolerance and return objectives.

Dividends Info

  • SPDR S&P 500 ETF Trust 0.90%
  • Vanguard Long-Term Treasury Index Fund ETF Shares 4.30%
  • Vanguard Short-Term Treasury Index Fund ETF Shares 4.20%
  • Vanguard Dividend Appreciation Index Fund ETF Shares 1.70%
  • Weighted yield (per year) 2.22%

The portfolio's average dividend yield is 2.22%, with contributions from various ETFs. Dividend income can provide a steady cash flow, particularly appealing for conservative investors seeking regular income. While the yield is modest, it complements the portfolio's overall return profile. To enhance income, consider increasing allocations to higher-yielding assets, while maintaining a balance with growth-oriented investments. Regularly reviewing dividend yields and adjusting allocations can help optimize income generation.

Ongoing product costs Info

  • abrdn Physical Gold Shares ETF 0.17%
  • SPDR S&P 500 ETF Trust 0.10%
  • Vanguard Long-Term Treasury Index Fund ETF Shares 0.04%
  • Vanguard Short-Term Treasury Index Fund ETF Shares 0.04%
  • Vanguard Dividend Appreciation Index Fund ETF Shares 0.06%
  • Weighted costs total (per year) 0.08%

The portfolio's total expense ratio (TER) is impressively low at 0.08%, indicating cost-efficient management. Low costs support better long-term performance by minimizing the impact of fees on returns. This efficiency aligns with best practices and enhances the portfolio's appeal for cost-conscious investors. While current costs are favorable, continually reviewing and comparing fees across similar investments can ensure ongoing cost-effectiveness. Consider exploring even lower-cost alternatives if available.

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