Moderately diversified portfolio with strong tech and healthcare focus and high dividend yield

Report created on Dec 7, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

1/5
Single-Focused
Less diversification More diversification

Positions

This portfolio is heavily weighted towards common stocks, with a small allocation to ETFs, indicating a preference for equity investments. The largest holdings include tech giants like Alphabet and Apple, alongside healthcare firms such as Vertex Pharmaceuticals and UnitedHealth Group. The presence of a Treasury Bond ETF suggests a slight conservative tilt to balance risk. This composition shows a tilt towards growth-oriented assets while maintaining a modest cushion against volatility. A balanced approach like this can potentially offer capital appreciation while managing risks through diversification in stable sectors.

Growth Info

Historical performance of this portfolio has been impressive, with a compound annual growth rate (CAGR) of 24.23%. This suggests a strong upward trend in past returns, albeit with a maximum drawdown of -21.31%, indicating occasional volatility. Such performance metrics highlight the potential for significant gains while reminding investors of the inherent risks. It's important to remember that past performance doesn't guarantee future results, and market conditions can change. Investors might consider strategies to mitigate drawdowns, such as diversifying further or incorporating more defensive assets.

Projection Info

The Monte Carlo analysis, which uses historical data to simulate potential future outcomes, suggests a wide range of possible returns. With a median expected return of 1,779.06% and a 5th percentile at 221.31%, there's a high probability of positive returns. However, the variability in outcomes underscores the uncertainty inherent in investing. While these projections offer insight into possible future scenarios, investors should be cautious, as they rely on historical data that may not predict future market conditions. Regular portfolio reviews and adjustments can help navigate these uncertainties.

Asset classes Info

  • Stocks
    89%
  • Cash
    11%

The portfolio is predominantly invested in stocks, accounting for 89.46% of the total allocation, with a minor allocation in cash and bonds. This heavy equity focus suggests a strategy aimed at capital growth, albeit with higher risk exposure. Such a concentration can amplify returns during favorable market conditions but may also lead to increased volatility. Diversifying into other asset classes, like bonds or alternative investments, could help reduce risk and provide more stable returns, particularly during market downturns.

Sectors Info

  • Health Care
    22%
  • Technology
    20%
  • Real Estate
    14%
  • Telecommunications
    13%
  • Financials
    8%
  • Consumer Discretionary
    5%
  • Energy
    4%
  • Consumer Staples
    4%

Sector-wise, the portfolio leans heavily towards healthcare and technology, which together constitute over 40% of the total allocation. This concentration could be beneficial if these sectors outperform, but it also increases vulnerability to sector-specific risks. A more balanced sectoral allocation can mitigate these risks and provide resilience against market shifts. Investors might consider increasing exposure to underrepresented sectors to enhance diversification and reduce dependence on the performance of a few sectors.

Regions Info

  • North America
    89%

Geographically, the portfolio is heavily concentrated in North America, accounting for 89.46% of its assets. This regional focus can benefit from the economic stability and growth potential of the US market. However, it also exposes the portfolio to risks specific to the region, such as economic downturns or policy changes. Expanding geographic exposure could enhance diversification and tap into growth opportunities in emerging markets or other developed economies, potentially reducing regional risk.

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 suggests a configuration that achieves a better risk-return ratio. An expected return of 2.88% with a risk level of 0.31% is achievable by adjusting the current asset allocations. This optimization focuses on maximizing returns for a given level of risk, rather than diversification. Investors should consider rebalancing their portfolio to approach the Efficient Frontier, thereby potentially enhancing returns without increasing risk.

Dividends Info

  • Apple Inc 0.40%
  • Bank of America Corp 1.60%
  • Alphabet Inc Class C 0.20%
  • Lowe's Companies Inc 1.60%
  • Procter & Gamble Company 2.30%
  • iShares® 0-3 Month Treasury Bond ETF 5.20%
  • Starwood Property Trust Inc 9.60%
  • UnitedHealth Group Incorporated 1.10%
  • VICI Properties Inc 5.30%
  • Western Midstream Partners LP 8.00%
  • Weighted yield (per year) 2.40%

The portfolio boasts a respectable total dividend yield of 2.4%, with contributions from various holdings like Starwood Property Trust and VICI Properties. Dividends can provide a steady income stream and cushion against market volatility. High-yielding stocks can enhance total returns, especially in low-interest-rate environments. However, relying too heavily on dividends can limit growth potential. Balancing between dividend-paying and growth-oriented stocks can optimize both income and capital appreciation.

Ongoing product costs Info

  • iShares® 0-3 Month Treasury Bond ETF 0.07%
  • Weighted costs total (per year) 0.01%

Portfolio costs are minimal, with the iShares Treasury Bond ETF incurring a Total Expense Ratio (TER) of just 0.07%. Keeping costs low is crucial for maximizing long-term returns, as high fees can erode gains over time. While this portfolio already benefits from low costs, investors should remain vigilant about any changes in expense ratios or hidden fees. Regularly reviewing and comparing costs across similar products can ensure that the portfolio remains cost-efficient and aligned with investment goals.

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