A balanced US-focused portfolio with strong historical performance and moderate diversification
Report created on Dec 31, 2024Risk profile
4/7
Diversification profile
1/5
Positions
-
IV iShares Core S&P 500 ETF
IVV - US4642872000 30.00% -
SC Schwab U.S. Dividend Equity ETF
SCHD - US8085247976 30.00% -
QQ Invesco NASDAQ 100 ETF
QQQM - US46138G6492 15.00% -
SP Invesco S&P 500® Momentum ETF
SPMO - US46138E3392 15.00% -
SG iShares® 0-3 Month Treasury Bond ETF
SGOV - US46436E7186 10.00%
This portfolio is composed primarily of ETFs, with a significant focus on US equities. The largest positions are the iShares Core S&P 500 ETF and the Schwab U.S. Dividend Equity ETF, each making up 30% of the portfolio. This is complemented by smaller allocations to Invesco NASDAQ 100, Invesco S&P 500 Momentum, and a 10% allocation to the iShares 0-3 Month Treasury Bond ETF. While this composition aligns with a balanced risk profile, it may benefit from increased diversification across different asset classes to reduce concentration risk.
Growth
Historically, this portfolio has performed well, with a Compound Annual Growth Rate (CAGR) of 13.68%. This indicates strong growth over time, outperforming many common benchmarks. However, it also experienced a maximum drawdown of -20.94%, reflecting potential volatility during market downturns. While past performance is not indicative of future results, understanding these trends helps set realistic expectations for future growth and risk.
Projection
The forward projection, using a Monte Carlo simulation with 1,000 iterations, suggests a wide range of potential outcomes. The median projection indicates a portfolio growth of 424.14%, while the 5th percentile shows a more conservative 91.29% growth. This simulation uses historical data to estimate future possibilities, highlighting both the potential for significant growth and the inherent uncertainties in the market. It's important to remember that these projections are not guarantees.
Asset classes
- Stocks 90%
- Cash 10%
The portfolio is heavily weighted towards stocks, comprising approximately 89.6% of the total allocation, with the remainder in cash equivalents. This allocation is typical for a balanced portfolio, but the high equity concentration could expose the portfolio to market volatility. Adding other asset classes, such as bonds or alternative investments, could enhance diversification and potentially stabilize returns during market fluctuations.
Sectors
- Technology 24%
- Financials 13%
- Consumer Discretionary 11%
- Health Care 10%
- Telecommunications 8%
- Consumer Staples 8%
- Industrials 8%
- Energy 5%
- Basic Materials 1%
- Utilities 1%
- Real Estate 1%
Sector allocation reveals a strong emphasis on technology, which constitutes 24.47% of the portfolio. This is followed by financial services and consumer cyclicals. While this sectoral distribution is aligned with many growth-oriented portfolios, it may lead to increased volatility, especially during economic downturns or interest rate changes. A more balanced sector allocation could mitigate sector-specific risks and enhance long-term stability.
Regions
- North America 89%
- Europe Developed 1%
The portfolio's geographic exposure is predominantly North American, at 89.09%, with minimal allocation to other regions. This concentration may limit exposure to international growth opportunities and increase vulnerability to regional economic shifts. Diversifying geographically by adding more assets from Europe, Asia, or emerging markets could provide better risk-adjusted returns and enhance global diversification.
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's current allocation can be optimized using the Efficient Frontier, which helps identify the best possible risk-return ratio. This involves adjusting the weights of existing assets to achieve a more efficient balance. While this optimization focuses on maximizing returns for a given level of risk, it doesn't necessarily address diversification. Regularly reviewing and adjusting allocations can ensure the portfolio remains aligned with investment goals.
Dividends
- iShares Core S&P 500 ETF 0.90%
- Invesco NASDAQ 100 ETF 0.60%
- Schwab U.S. Dividend Equity ETF 3.70%
- iShares® 0-3 Month Treasury Bond ETF 5.10%
- Invesco S&P 500® Momentum ETF 0.30%
- Weighted yield (per year) 2.02%
The portfolio's dividend yield stands at 2.02%, primarily driven by the Schwab U.S. Dividend Equity ETF. Dividends can provide a steady income stream and contribute to total returns, especially in volatile markets. For investors seeking income, focusing on high-dividend ETFs or stocks could enhance cash flow, while maintaining growth potential. Balancing growth and income is key to achieving long-term investment goals.
Ongoing product costs
- iShares Core S&P 500 ETF 0.03%
- Invesco NASDAQ 100 ETF 0.15%
- Schwab U.S. Dividend Equity ETF 0.06%
- iShares® 0-3 Month Treasury Bond ETF 0.07%
- Invesco S&P 500® Momentum ETF 0.13%
- Weighted costs total (per year) 0.08%
The portfolio's total expense ratio (TER) is impressively low at 0.08%, which supports better long-term performance by minimizing costs. Low fees mean more money stays invested, allowing compounding to work more effectively over time. It's important to regularly review the cost structure and consider replacing high-fee assets with lower-cost alternatives if they offer similar exposure and performance potential.
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