A growth-focused portfolio with strong U.S. equities presence and high dividend potential

Report created on Jan 13, 2025

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio is heavily weighted towards U.S. equities, with a notable 37.14% in the Vanguard S&P 500 ETF. It includes a mix of growth and dividend-focused ETFs, with the Vanguard High Dividend Yield and Schwab U.S. Dividend Equity ETFs together making up 27.01%. Compared to a typical growth-oriented portfolio, this one leans heavily on established markets, particularly the U.S., which can be beneficial for stability but may limit exposure to emerging opportunities. Consider diversifying further into international markets to capture potential higher growth rates.

Growth Info

Historically, the portfolio has shown a strong Compound Annual Growth Rate (CAGR) of 12.47%, outperforming many standard benchmarks. However, it also experienced a significant maximum drawdown of -35.16%, indicating vulnerability during market downturns. This performance suggests the portfolio has been effective in capturing market upswings but comes with higher volatility. To mitigate potential losses, consider adding more defensive assets or increasing cash reserves to cushion against future downturns.

Projection Info

Using Monte Carlo simulations, which project future outcomes based on historical data, the portfolio shows promising potential. With a median return of 302.96%, it indicates robust growth prospects. However, it's crucial to note that while these simulations provide insights, they rely on past data and cannot predict future market conditions with certainty. To prepare for various scenarios, maintain a flexible strategy that can adapt to changing market dynamics.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio is overwhelmingly concentrated in stocks, accounting for 99.4% of the total allocation. This concentration can drive high returns during bull markets but also increases risk during downturns. Compared to a balanced benchmark, this allocation lacks diversification across asset classes like bonds or real assets. Introducing these classes could help stabilize returns and reduce volatility, aligning with a more balanced risk-return profile suitable for long-term growth.

Sectors Info

  • Technology
    18%
  • Financials
    15%
  • Industrials
    14%
  • Health Care
    10%
  • Utilities
    9%
  • Consumer Discretionary
    9%
  • Consumer Staples
    7%
  • Energy
    6%
  • Telecommunications
    6%
  • Basic Materials
    5%
  • Real Estate
    2%

Sector allocation is diverse, with a significant 18.04% in technology and 14.71% in financial services. This diversity aligns well with benchmark norms, providing a balanced exposure across key economic sectors. However, given the current economic environment, consider monitoring sector trends closely. For instance, technology-heavy portfolios may face volatility during interest rate hikes. Adjusting sector weights in response to macroeconomic shifts could enhance portfolio resilience.

Regions Info

  • North America
    83%
  • Europe Developed
    7%
  • Asia Emerging
    3%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

Geographic exposure is predominantly in North America, at 83.46%, which aligns with a U.S.-centric investment strategy. While this can offer stability, it limits exposure to potentially high-growth regions like Asia or Latin America. Compared to global benchmarks, there is an underrepresentation in these regions. To enhance diversification and capture global growth opportunities, consider increasing allocations to emerging markets within Asia and Latin America.

Redundant positions Info

  • Vanguard High Dividend Yield Index Fund ETF Shares
    Schwab U.S. Dividend Equity ETF
    High correlation

The portfolio contains highly correlated assets, particularly between the Vanguard High Dividend Yield and Schwab U.S. Dividend Equity ETFs. High correlation means these assets tend to move in tandem, which can reduce diversification benefits. During market downturns, this lack of diversification can amplify losses. To improve risk management, consider replacing one of these with a less correlated asset to enhance portfolio diversification and resilience.

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 benefit from optimization using the Efficient Frontier, which seeks the best possible risk-return ratio. However, before optimizing, focus on removing overlapping assets that don't contribute to diversification. This involves adjusting current holdings to achieve an efficient mix without necessarily adding new investments. Optimization can help ensure that the portfolio is not only growth-oriented but also risk-efficient, maximizing returns for each unit of risk taken.

Dividends Info

  • iShares U.S. Infrastructure ETF 1.30%
  • Schwab U.S. Dividend Equity ETF 3.70%
  • Vanguard S&P 500 ETF 1.30%
  • Vanguard Extended Market Index Fund ETF Shares 1.10%
  • Vanguard Total International Stock Index Fund ETF Shares 3.40%
  • Vanguard High Dividend Yield Index Fund ETF Shares 2.80%
  • Weighted yield (per year) 2.18%

With a total dividend yield of 2.18%, the portfolio offers a reasonable income stream, particularly from the Schwab U.S. Dividend Equity ETF at 3.7%. Dividends can provide a steady cash flow, which is beneficial for reinvestment or income needs. For growth-focused portfolios, reinvesting dividends can compound returns over time. If income is a priority, consider increasing allocations to high-dividend assets, balancing growth and income objectives.

Ongoing product costs Info

  • iShares U.S. Infrastructure ETF 0.30%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Extended Market Index Fund ETF Shares 0.06%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Vanguard High Dividend Yield Index Fund ETF Shares 0.06%
  • Weighted costs total (per year) 0.09%

The portfolio's total expense ratio (TER) is impressively low at 0.09%, which is beneficial for long-term performance. Low costs mean more of your investment returns stay in your pocket, enhancing compounding effects over time. Compared to industry averages, this cost structure is well-optimized. However, continue monitoring for any fee changes and consider replacing higher-cost assets with more cost-effective alternatives if they arise.

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