A balanced portfolio with a focus on dividends and limited geographic diversification

Report created on Apr 25, 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 heavily weighted towards the Schwab U.S. Dividend Equity ETF, constituting 70% of the total allocation. This focus on dividend-yielding U.S. equities suggests a preference for income generation. The remaining 30% is split equally between the Vanguard S&P 500 ETF and the Vanguard Total World Stock Index Fund ETF Shares. While this composition leans towards U.S. equities, it does provide some exposure to global markets. However, the lack of bonds or other asset classes may limit diversification. Considering adding fixed-income assets could mitigate risk and enhance stability, especially during market downturns.

Growth Info

Historically, the portfolio has delivered a robust CAGR of 11.28%, indicating strong growth over time. However, the maximum drawdown of -33.45% highlights potential volatility risks. This performance is comparable to major equity benchmarks, suggesting that the portfolio has benefited from favorable market conditions. While past performance is a useful indicator, it's not a guarantee of future results. To manage potential volatility, consider strategies such as rebalancing or diversifying further into less correlated assets to reduce the impact of market downturns.

Projection Info

The Monte Carlo simulation projects a wide range of potential outcomes, with a median return of 293.9% over the simulation period. This approach uses historical data to model future performance, but it's important to note that it's based on assumptions that may not hold in the future. The high number of simulations with positive returns is encouraging, but the spread between the 5th and 67th percentiles indicates considerable uncertainty. Regularly reviewing and adjusting the portfolio based on changing market conditions and personal circumstances can help align with long-term goals.

Asset classes Info

  • Stocks
    100%

The portfolio is 100% allocated to stocks, with no exposure to bonds or alternative assets. While equities offer growth potential, they also come with higher volatility. A more balanced asset class allocation could provide better risk management. Diversifying into bonds or real estate may enhance income stability and reduce overall portfolio volatility. This is particularly relevant for investors seeking to preserve capital during market downturns or nearing retirement.

Sectors Info

  • Consumer Staples
    16%
  • Technology
    15%
  • Energy
    15%
  • Health Care
    13%
  • Industrials
    11%
  • Financials
    11%
  • Consumer Discretionary
    10%
  • Telecommunications
    6%
  • Basic Materials
    2%
  • Utilities
    1%
  • Real Estate
    1%

The portfolio's sector allocation is fairly balanced, with consumer defensive, technology, and energy sectors each making up around 15% of the portfolio. This distribution aligns closely with common benchmarks, indicating a diversified exposure across key economic sectors. However, the minimal allocation to utilities and real estate may limit defensive characteristics. As sector performance can be cyclical, maintaining a diversified sector allocation can help mitigate risks associated with sector-specific downturns.

Regions Info

  • North America
    94%
  • Europe Developed
    3%
  • Asia Emerging
    1%
  • Japan
    1%
  • Asia Developed
    1%

Geographically, the portfolio is heavily concentrated in North America, accounting for 94% of the allocation. This presents a significant home bias, which may limit exposure to growth opportunities in other regions. Consider increasing allocations to emerging markets or other developed regions to enhance geographic diversification. This could help reduce the risk associated with economic downturns in the U.S. and capitalize on growth in other parts of the world.

Market capitalization Info

  • Large-cap
    47%
  • Mid-cap
    27%
  • Mega-cap
    19%
  • Small-cap
    5%
  • Micro-cap
    1%

The portfolio's market capitalization allocation is skewed towards large-cap stocks, with big and mega caps making up 66% of the portfolio. This focus on larger, more established companies can provide stability and lower volatility. However, it may also limit exposure to the growth potential of smaller companies. Increasing the allocation to small and mid-cap stocks could enhance growth prospects and improve diversification, albeit with potentially higher risk.

Redundant positions Info

  • Vanguard S&P 500 ETF
    Vanguard Total World Stock Index Fund ETF Shares
    High correlation

The portfolio contains highly correlated assets, specifically the Vanguard S&P 500 ETF and the Vanguard Total World Stock Index Fund ETF Shares. High correlation means these assets tend to move together, which can limit diversification benefits. To improve diversification, consider reducing exposure to one of these ETFs or adding assets with lower correlation. This strategy can help manage risk and improve the portfolio's resilience during market downturns.

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.

While the portfolio is well-diversified across sectors, there is room for optimization using the Efficient Frontier. This concept helps identify the best possible risk-return ratio by adjusting asset allocations. However, this optimization should consider current holdings and may not align with other goals like income generation or sector preferences. Regularly reviewing and adjusting the portfolio can help ensure it remains aligned with personal risk tolerance and investment objectives.

Dividends Info

  • Schwab U.S. Dividend Equity ETF 4.00%
  • Vanguard S&P 500 ETF 1.40%
  • Vanguard Total World Stock Index Fund ETF Shares 2.00%
  • Weighted yield (per year) 3.31%

The portfolio's dividend yield is 3.31%, largely driven by the Schwab U.S. Dividend Equity ETF. This yield provides a steady income stream, which can be appealing for income-focused investors. Dividends can also help cushion the impact of market volatility by providing regular cash flow. However, relying heavily on dividends may limit growth potential. Balancing dividend-paying stocks with growth-oriented equities can provide both income and capital appreciation.

Ongoing product costs Info

  • Schwab U.S. Dividend Equity ETF 0.06%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total World Stock Index Fund ETF Shares 0.07%
  • Weighted costs total (per year) 0.06%

The portfolio's total expense ratio (TER) is impressively low at 0.06%, which is beneficial for long-term performance. Lower costs mean more of the portfolio's returns are retained, enhancing compounding effects over time. This cost efficiency aligns well with best practices for minimizing investment expenses. Maintaining a focus on low-cost investments can continue to support better net returns, especially in a low-return environment.

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