A balanced portfolio with high US exposure and a focus on dividend and growth ETFs

Report created on Dec 12, 2024

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 primarily composed of exchange-traded funds (ETFs), with a significant allocation to the Schwab U.S. Dividend Equity ETF and the Vanguard Total Stock Market Index Fund ETF Shares, each representing 30% of the portfolio. Additionally, there is a 20% allocation to the Schwab U.S. Large-Cap Growth ETF and a smaller 10% holding in Palantir Technologies Inc. The remaining 10% is allocated to the Vanguard Federal Money Market Fund. This composition indicates a strong preference for equities, particularly focusing on dividend and growth strategies, with a small cash component for liquidity.

Growth Info

Historically, the portfolio has demonstrated a strong compound annual growth rate (CAGR) of 20.92%, though it has also experienced a maximum drawdown of -29.45%. This suggests a robust potential for high returns, albeit with significant volatility. The portfolio's performance is concentrated, with 90% of returns occurring over just 25 days. This highlights the importance of remaining invested during market upswings to capture gains, while also being prepared for potential downturns.

Projection Info

Forward projections using Monte Carlo simulations suggest a wide range of potential outcomes, with an annualized return of 28.78% across 1,000 simulations. The simulations indicate a high probability of positive returns, with 988 out of 1,000 simulations ending positively. However, it is essential to remember that simulations rely on historical data, which may not predict future performance accurately. They provide a probabilistic range of outcomes rather than guarantees.

Asset classes Info

  • Stocks
    90%

The portfolio is heavily weighted towards equities, accounting for approximately 90% of the total allocation, with a minimal cash holding. This concentration in equities suggests a strategy focused on capital appreciation, though it may also expose the portfolio to higher volatility. Diversifying across different asset classes, such as bonds or alternative investments, could potentially reduce risk and enhance stability, especially during market downturns.

Sectors Info

  • Technology
    32%
  • Financials
    11%
  • Health Care
    10%
  • Consumer Discretionary
    9%
  • Industrials
    7%
  • Telecommunications
    6%
  • Consumer Staples
    6%
  • Energy
    5%
  • Basic Materials
    1%
  • Real Estate
    1%
  • Utilities
    1%

Sector allocation is notably concentrated, with a significant 32% exposure to technology. Other sectors, such as financial services and healthcare, are also represented but to a lesser extent. This concentration in technology may offer growth potential but could also increase risk if the sector underperforms. A more balanced sector allocation could enhance diversification and reduce reliance on a single sector's performance.

Regions Info

  • North America
    90%

The portfolio's geographic allocation is overwhelmingly focused on North America, comprising nearly 90% of the total. This heavy domestic bias may limit exposure to international growth opportunities and increase vulnerability to regional economic downturns. Expanding geographic diversification by including more developed and emerging markets could provide additional growth prospects and mitigate regional risks.

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 potentially be optimized using the Efficient Frontier, which aims to achieve the best possible risk-return ratio. This involves adjusting the allocation among current assets to maximize returns for a given level of risk. While optimization focuses on efficiency, it may not address other goals such as diversification or income generation. Regularly reviewing and rebalancing the portfolio can help maintain alignment with investment objectives.

Dividends Info

  • Schwab U.S. Dividend Equity ETF 2.60%
  • Schwab U.S. Large-Cap Growth ETF 0.30%
  • Vanguard Federal Money Market Fund Investor Shares 4.80%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Weighted yield (per year) 1.68%

The portfolio has a total dividend yield of 1.68%, with the Vanguard Federal Money Market Fund contributing the highest yield at 4.8%. Dividend income can provide a steady cash flow, particularly beneficial during periods of market uncertainty. Increasing the allocation to high-dividend-yielding assets could enhance income generation, though it may also impact growth potential.

Ongoing product costs Info

  • Schwab U.S. Dividend Equity ETF 0.06%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.04%

The portfolio's total expense ratio (TER) is relatively low at 0.04%, indicating cost efficiency. Lower costs can significantly improve long-term returns by minimizing the drag on performance. Continuously monitoring and managing investment costs is crucial, as even small reductions can compound into substantial savings over time, enhancing overall portfolio returns.

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