Balanced portfolio with strong U.S. focus and moderate sector diversification

Report created on Mar 13, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio is primarily composed of U.S. large-cap equities, with significant investments in S&P 500-related funds and a smaller allocation to emerging markets and gold. This structure aligns with a typical balanced profile, emphasizing stability while allowing for some growth potential. Diversification is moderately achieved, but the heavy reliance on U.S. equities may limit global exposure. To enhance diversification, consider increasing allocations in international markets or alternative asset classes to balance geographic and asset class exposure.

Growth Info

Historically, the portfolio has delivered a commendable CAGR of 11.93%, outperforming many benchmarks. However, it experienced a significant maximum drawdown of -33.26%, indicating vulnerability during market downturns. This performance suggests a strong growth potential, albeit with notable risk. To mitigate future drawdowns, consider incorporating more defensive assets or diversifying further across asset classes and regions, while maintaining the growth trajectory.

Projection Info

Monte Carlo simulations, which use historical data to predict potential future outcomes, suggest a promising outlook for this portfolio. With a high likelihood of positive returns, the median scenario projects substantial growth. However, simulations are based on historical trends and cannot guarantee future results. To improve confidence in future performance, regularly review and adjust the portfolio based on changing market conditions and personal financial goals.

Asset classes Info

  • Stocks
    97%
  • Other
    3%
  • Cash
    1%

The portfolio's asset allocation is heavily skewed towards stocks, comprising 97% of the holdings, with minimal allocation to other assets. This concentration may limit diversification benefits, particularly during equity market downturns. To enhance resilience, consider incorporating bonds or other non-equity investments. This could help stabilize returns during volatile periods, providing a more balanced risk-return profile.

Sectors Info

  • Technology
    30%
  • Financials
    13%
  • Health Care
    10%
  • Industrials
    9%
  • Telecommunications
    8%
  • Consumer Discretionary
    8%
  • Consumer Staples
    5%
  • Energy
    3%
  • Consumer Discretionary
    3%
  • Basic Materials
    3%
  • Real Estate
    3%
  • Utilities
    2%

With a 30% allocation to technology, the portfolio is significantly tech-heavy, which can lead to higher volatility, especially during periods of rising interest rates. Other sectors like financial services and healthcare offer diversification, but their weights are comparatively lower. To reduce sector-specific risk, consider rebalancing to include more defensive sectors such as utilities or consumer staples, which tend to perform well during economic downturns.

Regions Info

  • North America
    84%
  • Asia Emerging
    7%
  • Asia Developed
    3%
  • Africa/Middle East
    1%
  • Latin America
    1%
  • Europe Developed
    1%

The portfolio is predominantly North America-focused, with 84% of assets allocated there. This concentration may expose the portfolio to regional risks, such as economic downturns in the U.S. To enhance geographic diversification, consider increasing exposure to underrepresented regions like Europe or Latin America. This can help capture growth opportunities in emerging markets and reduce reliance on the U.S. economy.

Market capitalization Info

  • Mega-cap
    37%
  • Large-cap
    26%
  • Mid-cap
    14%
  • Small-cap
    11%
  • Micro-cap
    8%
  • No data
    3%

The portfolio's market capitalization allocation is well-distributed, with a focus on mega and big-cap stocks. This provides stability and growth potential, but the smaller allocation to small and micro-cap stocks could limit upside during periods of economic expansion. To capture more growth opportunities, consider increasing exposure to small and micro-cap stocks, which often offer higher growth potential albeit with increased volatility.

Redundant positions Info

  • Vanguard Total Stock Market Index Fund ETF Shares
    Vanguard S&P 500 ETF
    Fidelity 500 Index Fund
    High correlation
  • iShares Russell 2000 Growth ETF
    Vanguard Russell 2000 Index Fund ETF Shares
    High correlation

The portfolio contains highly correlated assets, particularly among the S&P 500-related funds. High correlation means these assets tend to move together, reducing diversification benefits. To enhance diversification, consider replacing some of these correlated assets with those that have a low correlation to the rest of the portfolio. This can help mitigate risk during market downturns and improve overall portfolio 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 current portfolio could potentially be optimized using the Efficient Frontier, which seeks the best possible risk-return ratio. By removing overlapping, highly correlated assets, the portfolio could achieve a higher expected return of 13.79% without increasing risk. This optimization focuses on the current assets and their allocation, not introducing new investments. Regular reviews and adjustments can help maintain optimal efficiency.

Dividends Info

  • Fidelity 500 Index Fund 1.30%
  • iShares Russell 2000 Growth ETF 0.90%
  • Invesco QQQ Trust 0.60%
  • Vanguard S&P 500 ETF 1.30%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Vanguard Russell 2000 Index Fund ETF Shares 1.30%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 3.10%
  • Weighted yield (per year) 1.40%

With a total dividend yield of 1.40%, the portfolio provides a modest income stream. The Vanguard FTSE Emerging Markets Index Fund ETF Shares contributes significantly to this yield. While dividends can enhance returns, the focus remains on growth. Investors seeking higher income may consider increasing exposure to high-dividend-paying stocks or funds. Balancing growth with income can provide more stability in volatile markets.

Ongoing product costs Info

  • Fidelity 500 Index Fund 0.02%
  • SPDR® Gold Shares 0.40%
  • iShares Russell 2000 Growth ETF 0.24%
  • Invesco QQQ Trust 0.20%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard Russell 2000 Index Fund ETF Shares 0.10%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.08%

The portfolio's average TER of 0.08% is impressively low, supporting better long-term performance by minimizing costs. Low costs are crucial for maximizing net returns over time. Maintaining a focus on cost-efficient funds is beneficial, but it's also important to ensure that low costs do not compromise diversification or asset quality. Regularly review fund expenses to ensure they remain competitive and aligned with investment goals.

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