A balanced portfolio with significant U.S. equity exposure and moderate emerging markets inclusion

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 is tailored for an investor with a balanced risk tolerance, seeking growth with some income through a diversified approach. The significant equity exposure suggests an inclination towards capital appreciation, while the bond allocation provides stability. Ideal for those with a medium to long-term investment horizon, it suits individuals comfortable with moderate risk and occasional volatility. The global diversification aligns with goals of capturing growth across various markets, making it suitable for wealth accumulation over time.

Positions

  • Schwab U.S. Large-Cap Growth ETF
    SCHG - US8085243009
    35.00%
  • Schwab U.S. Broad Market ETF
    SCHB - US8085241029
    25.00%
  • Schwab Emerging Markets Equity ETF
    SCHE - US8085247067
    15.00%
  • Schwab International Equity ETF
    SCHF - US8085248057
    15.00%
  • Schwab U.S. Aggregate Bond ETF
    SCHZ - US8085248396
    10.00%

This portfolio primarily consists of ETFs, with a significant allocation to large-cap U.S. equities (35%) and a broader U.S. market ETF (25%). The inclusion of emerging markets and international equities, each at 15%, adds a global dimension. A smaller allocation to U.S. bonds (10%) provides stability. The blend of equities and bonds indicates a balanced approach, aiming to capture growth while managing risk. Such a structure is essential for achieving a mix of growth and income, balancing the potential for capital appreciation with defensive assets like bonds.

Growth Info

Historically, the portfolio has delivered a compound annual growth rate (CAGR) of 12.13%, with a maximum drawdown of -30.89%. This suggests a strong performance but with periods of significant volatility. For example, if an investor had initially invested $10,000, it would have grown to approximately $31,000 over a decade, assuming similar performance. While past performance is not indicative of future results, understanding these trends helps set realistic expectations and prepare for potential downturns.

Projection Info

Forward projections using Monte Carlo simulations, which assess potential outcomes based on historical data, show a median return of 250.23% over the long term. While simulations offer insights into possible future performance, they rely on historical data and assumptions that may not hold in the future. The portfolio's projected annualized return of 10.63% suggests robust potential, but investors should remain aware of inherent uncertainties and market dynamics that could affect outcomes.

Asset classes

  • Stocks
    90%
  • Bonds
    10%
  • Cash
    0%
  • Other
    0%
  • No data
    0%

The portfolio is heavily weighted towards stocks, comprising nearly 90% of the assets, with a small allocation to bonds at approximately 10%. This allocation suggests a focus on growth with some degree of risk mitigation through bonds. Diversification across asset classes helps manage risk by spreading investments across different types of securities. However, the high equity exposure means the portfolio may be more volatile, particularly during market downturns, highlighting the importance of aligning asset allocation with risk tolerance.

Sectors

  • Technology
    29%
  • Financials
    13%
  • Consumer Discretionary
    11%
  • Telecommunications
    9%
  • Health Care
    8%
  • Industrials
    7%
  • Consumer Staples
    4%
  • Basic Materials
    3%
  • Energy
    3%
  • Utilities
    2%
  • Real Estate
    2%

Sector analysis reveals a significant concentration in technology (29%), followed by financial services (13%) and consumer cyclicals (11%). This concentration in certain sectors, especially technology, can lead to higher volatility but also offers potential for substantial growth. A well-diversified sector allocation can help mitigate risks associated with sector-specific downturns. Investors might consider rebalancing if they wish to reduce exposure to any single sector and enhance stability through a more even distribution across diverse sectors.

Regions

  • North America
    61%
  • Asia Emerging
    9%
  • Europe Developed
    8%
  • Asia Developed
    4%
  • Japan
    3%
  • Africa/Middle East
    2%
  • Latin America
    1%
  • Australasia
    1%
  • Europe Emerging
    0%

The portfolio's geographic exposure is predominantly in North America (61%), with notable allocations to emerging Asia (9%) and developed Europe (8%). This geographic diversification helps spread risk across different economic regions. However, the heavy North American focus may limit exposure to growth opportunities in other regions. Balancing geographic allocation can enhance diversification, potentially reducing the impact of regional economic downturns and capturing growth in diverse markets.

Redundant positions

  • Schwab U.S. Broad Market ETF
    Schwab U.S. Large-Cap Growth ETF
    High correlation

Asset correlation analysis shows a high correlation between the U.S. Broad Market and Large-Cap Growth ETFs. High correlation indicates that these assets tend to move in tandem, reducing diversification benefits. To manage risk effectively, investors should aim for a mix of assets with low correlation, as this can help smooth portfolio volatility. Consider adjusting allocations to include less correlated assets, thereby enhancing the portfolio's ability to withstand market fluctuations.

Dividends

  • Schwab U.S. Broad Market ETF 0.90%
  • Schwab Emerging Markets Equity ETF 0.10%
  • Schwab International Equity ETF 1.00%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Schwab U.S. Aggregate Bond ETF 4.30%
  • Weighted yield (per year) 0.96%

The portfolio has a modest total dividend yield of 0.96%, driven primarily by the U.S. Aggregate Bond ETF's yield of 4.3%. While dividends contribute to overall returns, the focus here appears to be more on capital appreciation than income generation. For investors seeking income, increasing allocation to higher-yielding assets might be beneficial. However, it's essential to balance income needs with growth objectives, ensuring the portfolio aligns with long-term financial goals.

Ongoing product costs

  • Schwab U.S. Broad Market ETF 0.03%
  • Schwab Emerging Markets Equity ETF 0.11%
  • Schwab International Equity ETF 0.06%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Schwab U.S. Aggregate Bond ETF 0.03%
  • Weighted costs total (per year) 0.05%

With a total expense ratio (TER) of 0.05%, the portfolio is cost-effective, minimizing the drag on returns. Lower costs enhance net returns, making them a critical consideration in portfolio management. Investors should regularly review expense ratios and consider lower-cost alternatives if available, without compromising on diversification or performance. Keeping costs in check is a straightforward way to improve long-term portfolio outcomes by retaining more of the investment gains.

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.

Optimizing this portfolio using the Efficient Frontier involves adjusting allocations to achieve the best possible risk-return ratio. Before optimizing, consider removing highly correlated assets, as overlapping assets do not enhance diversification. The goal is to achieve a portfolio that maximizes returns for a given level of risk. While optimization can improve efficiency, it should align with the investor's risk tolerance and financial objectives, ensuring the portfolio remains suitable for their needs.

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