A cautiously diversified portfolio emphasizing momentum and high dividend yield ETFs

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

Cautious Investors

This portfolio suits an investor with a cautious risk tolerance, seeking a balance between steady income and capital appreciation. The emphasis on momentum and high-dividend ETFs, along with a diversified mix of asset classes and geographic exposures, makes it ideal for individuals with a medium to long-term investment horizon. It is particularly well-suited for those looking to mitigate volatility while still participating in market growth, making it a solid choice for conservative investors aiming for moderate growth without excessive risk exposure.

Positions

  • Invesco S&P 500® Momentum ETF
    SPMO - US46138E3392
    30.00%
  • American Century ETF Trust
    AVGV - US0250722164
    20.00%
  • Janus Detroit Street Trust - Janus Henderson AAA CLO ETF
    JAAA - US47103U8457
    20.00%
  • Global X Funds
    SHLD - US37960A5294
    15.00%
  • Vanguard International High Dividend Yield Index Fund ETF Shares
    VYMI - US9219467944
    15.00%

This portfolio is strategically composed of five ETFs, focusing on momentum, high dividend yields, and a mix of asset classes and sectors. The Invesco S&P 500® Momentum ETF, with a 30% allocation, indicates a preference for stocks exhibiting upward price trends. The inclusion of specialized ETFs like the Janus Henderson AAA CLO ETF and the Vanguard International High Dividend Yield Index Fund ETF Shares, each with significant allocations, showcases an approach to diversification that spans across high-yield bonds and international equities. This composition aligns with a cautious risk profile, balancing growth potential with risk mitigation through diversified exposures.

Growth Info

With a Compound Annual Growth Rate (CAGR) of 24.94% and a maximum drawdown of -10.61%, the portfolio's historical performance suggests a strong return profile relative to its risk classification. The days contributing to 90% of returns highlight the portfolio's capacity for significant gains within short periods, a characteristic often associated with momentum strategies. This performance, however, should be interpreted with caution as past success does not guarantee future returns, and the relatively narrow time frames of high returns may indicate volatility.

Projection Info

Monte Carlo simulations, utilizing 1,000 iterations, project a wide range of potential outcomes, with a median annualized return of 28.09%. This forward-looking estimate, while optimistic, underscores the inherent uncertainties in market behavior. Such simulations are valuable for stress-testing the portfolio against various market conditions, though investors should remember these projections are based on historical data and cannot predict future market movements with certainty.

Asset classes Info

  • Stocks
    80%
  • Bonds
    20%
  • Cash
    0%
  • Other
    0%
  • No data
    0%

Allocating 80% to stocks and 20% to bonds, the portfolio is designed to strike a balance between growth and income, fitting a cautious risk profile. This asset class distribution supports a strategy aimed at capital appreciation while seeking to cushion against market downturns with fixed-income securities. The absence of cash or alternative investments may limit liquidity and diversification outside traditional markets, suggesting a potential area for adjustment depending on risk tolerance and investment horizon.

Sectors Info

  • Industrials
    20%
  • Financials
    16%
  • Technology
    16%
  • Telecommunications
    6%
  • Consumer Discretionary
    6%
  • Consumer Staples
    4%
  • Energy
    4%
  • Basic Materials
    3%
  • Health Care
    2%
  • Utilities
    2%
  • Real Estate
    1%

The sectoral allocation demonstrates a well-rounded approach, with significant investments in industrials, financial services, and technology. This spread mitigates sector-specific risks and capitalizes on a variety of growth drivers. However, the heavy weighting in these sectors could expose the portfolio to industry-specific downturns, highlighting the importance of continuous review and rebalancing to adapt to changing market conditions.

Regions Info

  • North America
    53%
  • Europe Developed
    14%
  • Japan
    4%
  • Asia Developed
    3%
  • Asia Emerging
    3%
  • Australasia
    2%
  • Africa/Middle East
    1%
  • Latin America
    1%
  • Europe Emerging
    0%

The geographic distribution, with over half of the assets in North America and meaningful allocations in developed European and Asian markets, reinforces the portfolio's cautious stance by focusing on established economies. This geographical spread helps in capturing growth in diverse economic environments while maintaining a conservative risk profile. However, the minimal exposure to emerging markets may limit potential high-growth opportunities, suggesting a possible area for strategic enhancement.

Market capitalization Info

  • Large-cap
    30%
  • Mega-cap
    26%
  • Mid-cap
    16%
  • Small-cap
    5%
  • Micro-cap
    2%

The portfolio's emphasis on big and mega-cap companies, comprising 56% of the allocation, aligns with its cautious risk approach, as these firms typically offer stability and resilience during market fluctuations. However, the relatively smaller allocations to medium, small, and micro-cap stocks may limit potential for outsized gains from high-growth sectors, indicating a trade-off between risk and return that merits regular reassessment.

Dividends Info

  • American Century ETF Trust 2.00%
  • Janus Detroit Street Trust - Janus Henderson AAA CLO ETF 5.50%
  • Global X Funds 0.20%
  • Invesco S&P 500® Momentum ETF 0.60%
  • Vanguard International High Dividend Yield Index Fund ETF Shares 3.80%
  • Weighted yield (per year) 2.28%

The portfolio's average dividend yield of 2.28% contributes to its income generation, complementing capital gains with regular income streams. This yield, bolstered by high-dividend ETFs, supports the portfolio's cautious profile by providing cash flow, which can be particularly valuable in market downturns. However, the focus on dividends should be balanced with growth prospects, ensuring that income does not come at the expense of capital appreciation potential.

Ongoing product costs Info

  • American Century ETF Trust 0.26%
  • Janus Detroit Street Trust - Janus Henderson AAA CLO ETF 0.21%
  • Global X Funds 0.50%
  • Invesco S&P 500® Momentum ETF 0.13%
  • Vanguard International High Dividend Yield Index Fund ETF Shares 0.22%
  • Weighted costs total (per year) 0.24%

With a total Expense Ratio (TER) of 0.24%, the portfolio is efficiently managed, minimizing the drag on returns due to costs. This cost-effectiveness is crucial for long-term growth, especially in a cautious strategy where excess fees can erode incremental gains. Regularly monitoring and comparing fund costs remains important, as even small differences can have a significant impact over time.

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's current configuration, while already exhibiting a favorable risk-return profile, could be further optimized. The suggestion of an alternative portfolio with an expected return of 7.74% at a lower risk level indicates room for improvement. This optimization process, based on the Efficient Frontier concept, suggests that adjustments in asset allocation could enhance returns without proportionately increasing risk, a valuable consideration for future portfolio adjustments.

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