A balanced portfolio with a strong focus on U.S. dividend equities and tech-heavy growth

Report created on Apr 8, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

The portfolio is heavily weighted towards U.S. dividend equities, with a 50% allocation to the Schwab U.S. Dividend Equity ETF. This is complemented by a 30% allocation to the Invesco NASDAQ 100 ETF, creating a tech-heavy tilt. The remaining 20% is split between the iShares U.S. Financials ETF and the Vanguard Total Stock Market Index Fund ETF Shares. Compared to a typical balanced portfolio, this one is less diversified, focusing heavily on dividend and tech sectors. To enhance diversification, consider incorporating more varied asset types, such as bonds or international equities, which can mitigate risks associated with sector-specific downturns.

Growth Info

Historically, the portfolio has delivered a robust CAGR of 11.06%, outperforming many standard benchmarks. However, it experienced a significant max drawdown of -22.69%, indicating vulnerability during market downturns. The concentration in tech and dividend equities likely contributed to these fluctuations. While past performance is not a predictor of future results, the historical data suggests a strong growth trajectory with some volatility. To better manage risk, consider balancing growth with more defensive assets, which can provide stability during turbulent periods.

Projection Info

The Monte Carlo simulation, which uses historical data to project future outcomes, shows a promising potential for this portfolio. With 1,000 simulations, the 50th percentile projection is a 342.4% increase, and the majority of simulations resulted in positive returns. However, it's important to note that simulations are based on past data and cannot guarantee future performance. To capitalize on potential growth while managing risk, regularly review and adjust your portfolio in response to market conditions and personal financial goals.

Asset classes Info

  • Stocks
    100%

The portfolio is entirely composed of stocks, which can lead to higher returns but also increased volatility. A more balanced allocation across asset classes, such as including bonds or real estate, could improve diversification and reduce risk. Compared to benchmarks that incorporate multiple asset classes, this portfolio is less diversified. Introducing other asset types could help cushion against stock market volatility and provide a more stable return profile over time.

Sectors Info

  • Technology
    24%
  • Financials
    20%
  • Health Care
    12%
  • Consumer Staples
    10%
  • Consumer Discretionary
    10%
  • Telecommunications
    8%
  • Industrials
    8%
  • Energy
    7%
  • Basic Materials
    1%
  • Utilities
    1%

Sector allocation is heavily concentrated in technology (24%) and financial services (20%), with other sectors like healthcare and consumer defensive making up smaller portions. This concentration can lead to higher volatility, especially in tech, which is sensitive to interest rate changes. Compared to benchmarks with broader sector exposure, this portfolio might experience more pronounced swings. To mitigate sector-specific risks, consider diversifying across more sectors, which can provide a buffer against downturns in any single area.

Regions Info

  • North America
    99%
  • Europe Developed
    1%

The portfolio is predominantly focused on North America, with 99% of assets allocated there. This geographic concentration limits exposure to international markets, which can be a source of diversification and growth. Compared to global benchmarks, this portfolio is underexposed to non-U.S. markets. To enhance geographic diversification, consider adding international equities, which can offer growth opportunities and reduce dependence on the U.S. market's performance.

Market capitalization Info

  • Large-cap
    51%
  • Mega-cap
    23%
  • Mid-cap
    21%
  • Small-cap
    4%
  • Micro-cap
    1%

The portfolio is mostly invested in large-cap stocks, with 51% in big and 23% in mega-cap companies. This focus on larger companies can provide stability but may limit exposure to the growth potential of smaller firms. Compared to benchmarks with a broader market cap distribution, this portfolio is less diversified. To capture growth opportunities and enhance diversification, consider increasing allocations to mid, small, and micro-cap stocks.

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 given the current assets. This process involves adjusting the allocation to achieve a more favorable balance between risk and return. While the portfolio is already performing well, optimizing can further enhance returns or reduce risk without changing the asset mix. Regularly reviewing and adjusting allocations can help maintain this efficiency as market conditions evolve.

Dividends Info

  • iShares U.S. Financials ETF 0.70%
  • Invesco NASDAQ 100 ETF 0.70%
  • Schwab U.S. Dividend Equity ETF 4.20%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.50%
  • Weighted yield (per year) 2.53%

The portfolio offers a respectable total dividend yield of 2.53%, significantly bolstered by the Schwab U.S. Dividend Equity ETF's 4.20% yield. Dividends can provide a steady income stream, which is especially valuable in volatile markets. This yield is an attractive feature for investors seeking income along with growth. To maintain or enhance this income stream, consider regularly reviewing the dividend policies of the ETFs in the portfolio and exploring other high-dividend options.

Ongoing product costs Info

  • iShares U.S. Financials ETF 0.40%
  • Invesco NASDAQ 100 ETF 0.15%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.12%

The portfolio's total expense ratio (TER) is impressively low at 0.12%, which supports better long-term performance by minimizing costs. This low-cost structure is a positive alignment with best practices, as it allows more of your returns to compound over time. Compared to the average ETF cost, this portfolio is cost-efficient. To maintain this advantage, ensure that any changes to the portfolio, such as adding new funds, do not significantly increase the overall expense ratio.

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