A balanced portfolio heavily weighted in US equities with modest international diversification

Report created on Dec 12, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

This portfolio consists of four ETFs, with a heavy emphasis on the Vanguard S&P 500 ETF at 70%. The remainder is split between Avantis U.S. Small Cap Value ETF (15%), Invesco NASDAQ 100 ETF (10%), and Vanguard Total International Stock Index Fund ETF Shares (5%). This composition suggests a strong focus on large-cap US equities, with some exposure to small-cap value and international markets. Such a structure can provide stability through large-cap investments while potentially capturing additional growth through small-cap and international diversification. Consider periodically reviewing the allocation to ensure it aligns with your evolving investment goals.

Growth Info

Historically, this portfolio has demonstrated a compound annual growth rate (CAGR) of 16.74% with a maximum drawdown of -24.13%. This indicates robust growth potential but also highlights vulnerability during market downturns. Understanding these figures helps set realistic expectations about potential gains and risks. While past performance is not indicative of future results, it's crucial to remain aware of market conditions and adjust your strategy as needed. Regular performance reviews can ensure your portfolio continues to align with your financial objectives.

Projection Info

Using Monte Carlo simulations, this portfolio shows a promising forward projection with an annualized return of 17.2%. Monte Carlo simulations analyze possible future outcomes by considering historical data, offering a range of potential results. In this case, 997 out of 1,000 simulations resulted in positive returns, emphasizing the portfolio's potential for growth. However, it's important to note that these simulations are based on historical data and market conditions can change. Keep an eye on economic indicators and be prepared to make adjustments to your portfolio as necessary.

Asset classes Info

  • Stocks
    100%

The portfolio is overwhelmingly allocated to stocks, accounting for nearly 100% of the assets. This concentration in equities suggests a focus on growth, but it also exposes the portfolio to market volatility. While stocks can provide substantial returns over time, they can also experience significant fluctuations. Diversifying into other asset classes like bonds or real estate could help reduce volatility and balance the risk-return profile. Consider exploring additional asset classes to enhance diversification and potentially stabilize returns.

Sectors Info

  • Technology
    30%
  • Financials
    14%
  • Consumer Discretionary
    11%
  • Industrials
    9%
  • Health Care
    9%
  • Telecommunications
    9%
  • Consumer Staples
    6%
  • Energy
    5%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    2%

Sector allocation reveals a heavy concentration in technology (29.82%) and financial services (14.48%), with other sectors like consumer cyclicals and industrials also represented. This concentration may lead to sector-specific risks, especially if these industries face downturns. While technology and financials have been strong performers, it's important to balance exposure to mitigate potential risks. Diversifying across more sectors can provide stability and reduce reliance on a few industries. Regularly review sector allocations to maintain a balanced approach.

Regions Info

  • North America
    94%
  • Europe Developed
    2%
  • Asia Emerging
    1%
  • Japan
    1%
  • Asia Developed
    1%

Geographically, the portfolio is heavily weighted towards North America, with 94.41% of assets in this region. This concentration may limit exposure to growth opportunities in other parts of the world. While US markets have historically performed well, diversifying geographically can help capture growth in emerging markets and reduce regional risk. Consider increasing exposure to international markets to improve diversification and take advantage of global economic trends. Monitoring geopolitical events can also help manage regional risks effectively.

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.

This portfolio can be optimized using the Efficient Frontier, which seeks the best risk-return ratio based on current assets. By adjusting the allocation among existing ETFs, you can potentially enhance returns or reduce risk without changing the portfolio's overall composition. Optimization focuses on maximizing efficiency, not necessarily diversification or other goals. Regularly reassess the portfolio's position on the Efficient Frontier to ensure it remains optimal as market conditions change.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Invesco NASDAQ 100 ETF 0.60%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 2.90%
  • Weighted yield (per year) 1.27%

This portfolio offers a modest dividend yield of 1.27%, with the Vanguard Total International Stock Index Fund ETF Shares contributing the highest yield at 2.9%. Dividends can provide a steady income stream and contribute to total returns, especially during market volatility. Reinvesting dividends can also compound growth over time. If income is a priority, consider increasing exposure to higher-yielding assets. Regularly review dividend yields to ensure they align with your income needs and investment strategy.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Invesco NASDAQ 100 ETF 0.15%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.08%

The portfolio's total expense ratio (TER) is 0.08%, with individual costs ranging from 0.03% to 0.25%. Low costs are a significant advantage, as they can enhance net returns over time. Minimizing expenses is crucial for optimizing long-term performance, as even small differences in fees can compound significantly. Regularly review the cost structure to ensure it remains competitive and seek opportunities to reduce expenses further. Consider low-cost alternatives if available, but ensure they align with your investment strategy.

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