A balanced portfolio with strong U.S. focus and moderate risk exposure

Report created on Mar 27, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

This portfolio is composed of six ETFs, with a significant allocation to the Vanguard S&P 500 ETF at 30% and the Vanguard Total International Stock Index Fund ETF at 20%. The remaining funds are diversified across the Invesco NASDAQ 100 ETF, Schwab U.S. Dividend Equity ETF, Vanguard Health Care Index Fund ETF, and Vanguard Total Stock Market Index Fund ETF Shares. Compared to a typical balanced portfolio, this structure leans heavily toward U.S. equities. A well-rounded allocation like this ensures broad exposure but may benefit from further diversification into bonds or alternative assets to mitigate risk.

Growth Info

Historically, this portfolio has delivered a robust CAGR of 11.81% with a maximum drawdown of -24.19%. This performance, while impressive, reflects the inherent volatility of equity-heavy portfolios. Compared to benchmarks, this portfolio's return is commendable, though the drawdown suggests potential vulnerability during market downturns. Investors should be aware that past performance does not guarantee future results, and they might consider strategies to mitigate drawdowns, such as increasing allocations to defensive assets.

Projection Info

The forward projection using Monte Carlo simulations indicates a potential annualized return of 12.40%, with a wide range of possible outcomes. Monte Carlo analysis uses historical data to simulate future scenarios, providing a range of potential portfolio values. The simulations show a high probability of positive returns, with 996 out of 1,000 simulations yielding gains. While this is promising, it's crucial to remember that simulations are based on historical data and cannot predict future events with certainty. Regularly reviewing asset allocation could help align projections with investment goals.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio is heavily weighted toward stocks, comprising 99% of the allocation, with a minimal 1% in cash. This equity-centric approach provides growth potential but may lack the stability offered by bonds or other asset classes. Compared to a balanced benchmark, this allocation is more aggressive. Investors seeking to reduce risk may consider diversifying into fixed income or alternative investments to balance growth with stability, enhancing the portfolio's resilience to market fluctuations.

Sectors Info

  • Technology
    25%
  • Health Care
    20%
  • Financials
    13%
  • Consumer Discretionary
    10%
  • Industrials
    8%
  • Telecommunications
    8%
  • Consumer Staples
    7%
  • Energy
    4%
  • Basic Materials
    2%
  • Utilities
    2%
  • Real Estate
    2%

Sector allocation shows a strong emphasis on technology (25%) and healthcare (20%), followed by financial services and consumer cyclicals. This concentration aligns with tech and healthcare trends but could lead to higher volatility, especially during interest rate changes or sector-specific downturns. Compared to benchmarks, this allocation is slightly tech-heavy. Diversifying across more sectors or adjusting weightings could mitigate sector-specific risks and align the portfolio with broader market movements.

Regions Info

  • North America
    81%
  • Europe Developed
    8%
  • Asia Emerging
    3%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

The portfolio's geographic allocation is predominantly North American (81%), with limited exposure to other regions. This concentration offers stability given the U.S. market's historical performance but may miss opportunities in emerging markets. Compared to global benchmarks, this allocation is less diversified geographically. Expanding exposure to international markets, particularly emerging economies, could enhance diversification and capture growth opportunities outside North America.

Market capitalization Info

  • Large-cap
    40%
  • Mega-cap
    37%
  • Mid-cap
    18%
  • Small-cap
    3%
  • Micro-cap
    1%

Market capitalization distribution leans heavily toward big and mega-cap stocks, accounting for 77% of the portfolio. This focus on large companies provides stability and liquidity but may limit exposure to the growth potential of small and mid-cap stocks. Compared to a typical benchmark, this allocation is more concentrated in larger caps. Investors might consider increasing allocations to smaller market caps to balance the portfolio's growth potential with its stability.

Redundant positions Info

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

The portfolio contains highly correlated assets, particularly the Vanguard Total Stock Market Index Fund ETF Shares and the Vanguard S&P 500 ETF. High correlation means these assets tend to move together, limiting diversification benefits. During market downturns, this could amplify losses. To enhance diversification, consider replacing one of these ETFs with assets that have a lower correlation, potentially improving risk-adjusted returns and reducing volatility.

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 could be optimized using the Efficient Frontier, which seeks the best possible risk-return ratio based on current assets. This approach focuses on reallocating existing assets to achieve optimal performance without necessarily adding new ones. While the current allocation is well-balanced, exploring minor adjustments in weightings could enhance returns relative to risk. It's important to note that optimization doesn't guarantee success, as it relies on historical data and assumptions.

Dividends Info

  • Invesco NASDAQ 100 ETF 0.50%
  • Schwab U.S. Dividend Equity ETF 2.80%
  • Vanguard Health Care Index Fund ETF Shares 1.20%
  • Vanguard S&P 500 ETF 1.00%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.00%
  • Vanguard Total International Stock Index Fund ETF Shares 2.80%
  • Weighted yield (per year) 1.58%

The portfolio's dividend yield stands at 1.58%, with notable contributions from the Schwab U.S. Dividend Equity ETF and the Vanguard Total International Stock Index Fund ETF Shares. Dividend income can provide stability and cash flow, especially in volatile markets. This yield is reasonable for a balanced portfolio, offering a mix of growth and income. For those seeking higher income, increasing allocations to dividend-focused assets could enhance cash flow, though it may affect growth potential.

Ongoing product costs Info

  • Invesco NASDAQ 100 ETF 0.15%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Vanguard Health Care Index Fund ETF Shares 0.10%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.05%
  • Weighted costs total (per year) 0.06%

The portfolio's total expense ratio (TER) is impressively low at 0.06%, indicating efficient cost management. Low costs can significantly enhance long-term returns by minimizing the drag on performance. Compared to industry standards, this TER is favorable and supports better net returns. Maintaining this low-cost structure is beneficial for long-term growth. Regularly reviewing fund fees and seeking low-cost alternatives can further optimize cost efficiency.

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