Balanced portfolio with tech and real estate emphasis and moderate geographic diversification

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 risk tolerance seeking growth and moderate income. With a focus on technology and real estate, it appeals to those interested in capital appreciation over a medium to long-term horizon. The moderate geographic diversification and low costs make it ideal for investors looking to build wealth while managing risk. This investor values a blend of stability and growth, using a mix of large-cap equities and income-generating assets to achieve financial goals.

Positions

  • Invesco QQQ Trust
    QQQ - US46090E1038
    20.00%
  • JPMorgan Equity Premium Income ETF
    JEPI - US46641Q3323
    10.00%
  • Schwab U.S. Dividend Equity ETF
    SCHD - US8085247976
    10.00%
  • Vanguard Real Estate Index Fund ETF Shares
    VNQ - US9229085538
    10.00%
  • Vanguard S&P 500 ETF
    VOO - US9229083632
    10.00%
  • iShares Cohen & Steers REIT ETF
    ICF - US4642875649
    5.00%
  • iShares Russell 2000 Growth ETF
    IWO - US4642876480
    5.00%
  • Schwab U.S. REIT ETF
    SCHH - US8085248479
    5.00%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares
    VEA - US9219438580
    5.00%
  • Vanguard Dividend Appreciation Index Fund ETF Shares
    VIG - US9219088443
    5.00%
  • Vanguard Growth Index Fund ETF Shares
    VUG - US9229087369
    5.00%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares
    VWO - US9220428588
    5.00%
  • Energy Select Sector SPDR® Fund
    XLE - US81369Y5069
    5.00%

The portfolio is moderately diversified, primarily composed of ETFs, with a significant focus on technology and real estate. Notably, the Invesco QQQ Trust holds a substantial 20% allocation. This composition aligns with a balanced risk profile, offering growth potential through tech exposure while ensuring stability via real estate investments. Comparing to typical benchmarks, the portfolio appears slightly overweight in tech and real estate, which might offer higher returns but could also increase volatility. To enhance balance, consider diversifying into other sectors or asset classes to mitigate risks associated with concentrated holdings.

Growth Info

Historically, this portfolio has delivered strong returns with a Compound Annual Growth Rate (CAGR) of 15.17%. This performance is impressive, especially when compared to standard market indices. However, it's essential to note the maximum drawdown of -23.47%, indicating potential volatility. While past performance is not indicative of future results, it provides a baseline for expectations. To manage risk, consider strategies like rebalancing or adding more defensive assets to reduce potential future drawdowns while maintaining growth prospects.

Projection Info

Monte Carlo simulations, which use historical data to model potential future outcomes, indicate a wide range of possible returns. With a median projection of 528.5% and a 5th percentile of 81.0%, the portfolio shows robust potential but also highlights variability. While these simulations offer valuable insights, they rely on historical trends and cannot predict future market conditions. To enhance predictability, regularly review and adjust the portfolio based on economic indicators and market shifts, ensuring alignment with personal risk tolerance and investment goals.

Asset classes Info

  • Stocks
    78%
  • Real Estate
    20%
  • No data
    1%
  • Cash
    0%
  • Other
    0%

The asset allocation predominantly comprises stocks (78%) and real estate (20%), with minimal exposure to other asset classes. This structure suggests a focus on growth through equities while leveraging real estate for income and stability. Compared to benchmarks, the portfolio is slightly under-diversified, lacking in bonds or alternative investments. To improve diversification and potentially reduce risk, consider incorporating fixed-income securities or alternative assets, which can provide a buffer during equity market downturns and enhance overall portfolio resilience.

Sectors Info

  • Technology
    23%
  • Real Estate
    21%
  • Consumer Discretionary
    9%
  • Financials
    9%
  • Health Care
    8%
  • Energy
    8%
  • Industrials
    7%
  • Telecommunications
    7%
  • Consumer Staples
    6%
  • Basic Materials
    2%
  • Utilities
    2%

The sector allocation is notably concentrated in technology (23%) and real estate (21%), with smaller allocations to other sectors like consumer cyclicals and financial services. This concentration can lead to higher volatility, especially if tech or real estate sectors face downturns. While these sectors have driven recent growth, their performance can be cyclical. To mitigate risk, consider diversifying into less represented sectors, such as utilities or consumer defensives, which can provide stability and reduce reliance on tech and real estate performance.

Regions Info

  • North America
    90%
  • Europe Developed
    3%
  • Asia Emerging
    3%
  • Asia Developed
    1%
  • Japan
    1%
  • Africa/Middle East
    1%
  • Latin America
    0%
  • Australasia
    0%
  • Europe Emerging
    0%

Geographically, the portfolio is heavily weighted towards North America (90%), with limited exposure to other regions. This concentration may limit diversification benefits and expose the portfolio to regional economic risks. Common benchmarks typically have a more balanced global allocation. To enhance geographic diversification, consider increasing exposure to developed markets in Europe and Asia or emerging markets, which can provide growth opportunities and reduce dependency on the North American market's performance.

Market capitalization Info

  • Large-cap
    34%
  • Mega-cap
    29%
  • Mid-cap
    26%
  • Small-cap
    7%
  • Micro-cap
    3%

The market capitalization distribution is well-balanced, with significant exposure to big (34%) and mega (29%) cap stocks, complemented by medium (26%) and small (7%) caps. This mix offers a blend of stability and growth potential, as larger companies provide reliability, while smaller ones offer higher growth prospects. However, the portfolio's limited exposure to micro caps (3%) might restrict potential high-risk, high-reward opportunities. To optimize growth, consider slightly increasing small or micro-cap exposure, balancing potential volatility with growth potential.

Redundant positions Info

  • Vanguard Real Estate Index Fund ETF Shares
    Schwab U.S. REIT ETF
    iShares Cohen & Steers REIT ETF
    High correlation
  • Invesco QQQ Trust
    Vanguard Growth Index Fund ETF Shares
    High correlation

Asset correlation analysis reveals significant overlaps, particularly among real estate ETFs and growth-focused tech ETFs. High correlation means these assets tend to move together, which can limit diversification benefits. In downturns, correlated assets may amplify losses, reducing the portfolio's defensive capabilities. To enhance diversification, consider replacing some correlated assets with those that have lower correlation, thus spreading risk more effectively across different economic scenarios and improving overall portfolio resilience.

Dividends Info

  • iShares Cohen & Steers REIT ETF 1.70%
  • iShares Russell 2000 Growth ETF 0.90%
  • JPMorgan Equity Premium Income ETF 6.70%
  • Invesco QQQ Trust 0.60%
  • Schwab U.S. Dividend Equity ETF 3.50%
  • Schwab U.S. REIT ETF 3.10%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 3.10%
  • Vanguard Dividend Appreciation Index Fund ETF Shares 1.70%
  • Vanguard Real Estate Index Fund ETF Shares 3.60%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Growth Index Fund ETF Shares 0.50%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 3.20%
  • Energy Select Sector SPDR® Fund 3.30%
  • Weighted yield (per year) 2.50%

With a total yield of 2.50%, the portfolio offers a moderate income stream, supported by high-yielding ETFs like the JPMorgan Equity Premium Income ETF (6.70%). Dividends can provide a stable income source, especially during market volatility. However, the portfolio's focus on growth sectors may limit overall dividend yield. For income-focused investors, consider increasing allocations to higher-yielding assets or dividend-focused ETFs, which can provide a more consistent income stream and complement growth-oriented holdings.

Ongoing product costs Info

  • iShares Cohen & Steers REIT ETF 0.33%
  • iShares Russell 2000 Growth ETF 0.24%
  • JPMorgan Equity Premium Income ETF 0.35%
  • Invesco QQQ Trust 0.20%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Schwab U.S. REIT ETF 0.07%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 0.05%
  • Vanguard Dividend Appreciation Index Fund ETF Shares 0.06%
  • Vanguard Real Estate Index Fund ETF Shares 0.12%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Growth Index Fund ETF Shares 0.04%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 0.08%
  • Energy Select Sector SPDR® Fund 0.09%
  • Weighted costs total (per year) 0.14%

The portfolio's total expense ratio (TER) is 0.14%, which is impressively low and supports long-term returns by minimizing costs. This low-cost structure is a strong advantage, aligning well with best practices for cost-efficient investing. High fees can erode returns over time, so maintaining a low TER is beneficial. To ensure continued cost-effectiveness, regularly review expense ratios and consider replacing higher-cost ETFs with more affordable alternatives, ensuring that cost savings contribute positively to net returns.

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 can be optimized using the Efficient Frontier, which seeks the best possible risk-return ratio. This involves adjusting current asset allocations to achieve a more efficient balance. While the portfolio is moderately diversified, optimizing through the Efficient Frontier can enhance returns without increasing risk. However, this process requires careful analysis and may involve reallocating assets to underrepresented areas. Regularly review and adjust allocations to maintain an optimal risk-return balance, ensuring alignment with evolving market conditions and personal investment goals.

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