A balanced portfolio with strong tech focus and moderate risk exposure

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

What type of investor this portfolio is suitable for

Balanced Investors

This portfolio suits an investor with a balanced approach, moderate risk tolerance, and a medium to long-term investment horizon. It is ideal for those seeking growth through significant equity exposure while maintaining a degree of stability with bonds and gold. The focus on U.S. equities suggests a preference for familiar markets, making it suitable for investors comfortable with domestic exposure. This portfolio is well-suited for individuals looking to balance growth potential with risk management.

Positions

  • Invesco NASDAQ 100 ETF
    QQQM - US46138G6492
    35.00%
  • Vanguard S&P 500 ETF
    VOO - US9229083632
    35.00%
  • iShares® 0-3 Month Treasury Bond ETF
    SGOV - US46436E7186
    20.00%
  • SPDR® Gold Shares
    GLD - US78463V1070
    10.00%

The portfolio is composed of four ETFs, with a significant focus on equities, particularly in large-cap U.S. stocks. Invesco NASDAQ 100 ETF and Vanguard S&P 500 ETF each hold 35% of the portfolio, providing substantial exposure to U.S. equities. The iShares 0-3 Month Treasury Bond ETF accounts for 20%, offering liquidity and stability, while SPDR Gold Shares at 10% provides a hedge against inflation. This composition aligns with a balanced profile, but the heavy equity focus suggests potential for higher volatility compared to more diversified portfolios.

Growth Info

Historically, the portfolio has performed well, achieving a Compound Annual Growth Rate (CAGR) of 12.94%. This is impressive, especially when compared to typical benchmarks like the S&P 500. However, it also faced a maximum drawdown of -23.26%, indicating vulnerability during market downturns. This past performance highlights both the potential for strong returns and the importance of managing risk. It's crucial to remember that historical returns do not guarantee future results, so diversification remains key to mitigating potential losses.

Projection Info

Monte Carlo simulations, which use historical data to predict future outcomes, indicate a broad range of potential portfolio results. With 1,000 simulations, the median projection shows a 317.13% return, while the 5th percentile predicts a 57.6% return. Although nearly all simulations suggest positive returns, it's important to understand that these forecasts are based on past data and assumptions. They provide a range of possibilities rather than certainties. Maintaining a diversified approach can help manage risks associated with future market uncertainties.

Asset classes

  • Stocks
    70%
  • Cash
    20%
  • Other
    10%

The portfolio is predominantly invested in stocks, accounting for nearly 70% of the total allocation. This heavy equity weighting can drive growth but also increases exposure to market volatility. The inclusion of 20% in cash-like assets, such as treasury bonds, offers stability and liquidity, which can be beneficial during market fluctuations. Gold, classified as 'Other,' provides a defensive asset that can act as a hedge. While the asset class allocation supports growth, a more diversified mix could reduce risk and enhance stability.

Sectors

  • Technology
    29%
  • Telecommunications
    9%
  • Consumer Discretionary
    9%
  • Health Care
    6%
  • Financials
    5%
  • Consumer Staples
    4%
  • Industrials
    4%
  • Energy
    1%
  • Utilities
    1%
  • Basic Materials
    1%
  • Real Estate
    1%

Sector allocation reveals a strong concentration in technology, making up 29.35% of the portfolio. While this aligns with current market trends favoring tech, it also exposes the portfolio to sector-specific risks, such as regulatory changes or tech bubbles. Other sectors, like communication services and consumer cyclicals, offer some diversification, but the overall sector balance is skewed. To mitigate sector-specific risks, consider increasing exposure to underrepresented sectors like energy or utilities, which can provide stability and income.

Regions

  • North America
    69%
  • Europe Developed
    1%
  • Latin America
    0%
  • Asia Emerging
    0%
  • Asia Developed
    0%

Geographically, the portfolio is heavily weighted towards North America, with nearly 69% exposure. This reflects a strong focus on U.S. markets, which can be advantageous given their historical performance. However, the limited exposure to other regions, such as Europe and Asia, may reduce diversification benefits. A more geographically diverse portfolio could help mitigate risks associated with regional economic downturns and capture growth opportunities in emerging markets. Consider adding exposure to international markets for better global diversification.

Dividends

  • Invesco NASDAQ 100 ETF 0.40%
  • iShares® 0-3 Month Treasury Bond ETF 5.10%
  • Vanguard S&P 500 ETF 1.20%
  • Weighted yield (per year) 1.58%

The portfolio's dividend yield stands at 1.58%, primarily driven by the iShares 0-3 Month Treasury Bond ETF, which offers a 5.1% yield. Dividends can provide a steady income stream, which is beneficial for investors seeking regular cash flow. However, the lower yields from the equity ETFs suggest a focus on capital appreciation over income generation. If income is a priority, consider increasing exposure to higher-yielding assets or dividend-focused funds to enhance the portfolio's income potential.

Ongoing product costs

  • SPDR® Gold Shares 0.40%
  • Invesco NASDAQ 100 ETF 0.15%
  • iShares® 0-3 Month Treasury Bond ETF 0.07%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.12%

The portfolio's total expense ratio (TER) is a low 0.12%, which is impressive and aligns with cost-efficient investing principles. The Vanguard S&P 500 ETF, with a TER of 0.03%, contributes significantly to keeping costs down. While the SPDR Gold Shares have a higher expense ratio of 0.4%, the overall cost remains competitive. Low fees are crucial for maximizing long-term returns, as they reduce the drag on performance. Maintaining or further reducing costs through careful selection of low-fee funds can enhance the portfolio's efficiency.

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.

The portfolio could potentially be optimized using the Efficient Frontier, which suggests the best possible risk-return ratio based on the current assets. This approach focuses on adjusting the allocation to achieve the highest expected return for a given level of risk. While the portfolio is already well-structured, exploring slight reallocations among existing assets could enhance efficiency. It's important to note that efficiency doesn't guarantee diversification or align with all investment goals, but it does optimize the risk-return balance.

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