A highly diversified cautious portfolio with moderate risk and a focus on balanced asset allocation

Report created on Dec 19, 2024

Risk profile Info

3/7
Cautious
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification

Positions

The portfolio comprises a variety of ETFs with a focus on both growth and stability. It includes allocations to aggressive, growth, conservative, and moderate allocation ETFs, along with sector-specific funds in technology, healthcare, and real estate. This structure aims to balance potential returns with risk management. A diversified mix of stocks, bonds, and real estate is evident, with stocks making up the majority. The inclusion of both domestic and international funds enhances diversification, which is crucial for reducing risk and smoothing returns over time.

Growth Info

With a compound annual growth rate (CAGR) of 8.56%, the portfolio has historically delivered moderate returns. The maximum drawdown of -29.12% indicates the potential risk during downturns. This performance suggests a balanced approach between risk and reward, suitable for investors seeking steady growth. However, past performance doesn't guarantee future results, and market conditions can vary. It's essential to consider this historical context when making decisions, but also to stay informed about current market trends and conditions.

Projection Info

The Monte Carlo simulation, using historical data, provides a range of potential future outcomes for the portfolio. With 1,000 simulations, the median projected return stands at 198.31%, suggesting a favorable outlook. However, projections can be uncertain as they rely on past data, which might not reflect future market dynamics. Understanding these potential variations can help in setting realistic expectations and preparing for different scenarios. It's crucial to remain flexible and ready to adjust strategies as market conditions evolve.

Asset classes Info

  • Stocks
    69%
  • Bonds
    26%
  • Real Estate
    4%
  • Cash
    1%

The portfolio's asset allocation includes approximately 69% in stocks, 26% in bonds, and 4% in real estate. This distribution supports diversification, which can mitigate risk by spreading investments across different asset classes. Stocks offer growth potential, while bonds provide stability and income. Real estate can add an additional layer of diversification and potential inflation protection. It's important to regularly review this allocation to ensure it aligns with one's investment goals and risk tolerance, adjusting as necessary to maintain a balanced approach.

Sectors Info

  • Technology
    22%
  • Industrials
    15%
  • Health Care
    15%
  • Real Estate
    10%
  • Financials
    9%
  • Consumer Discretionary
    6%
  • Telecommunications
    4%
  • Consumer Staples
    3%
  • Energy
    2%
  • Basic Materials
    2%
  • Utilities
    2%

Sector allocation is notably diversified, with technology, industrials, and healthcare making up significant portions. This diversity helps reduce sector-specific risks and can capture growth across different economic areas. However, the concentration in technology at 21.8% indicates a higher exposure to this fast-evolving sector. While this can enhance growth prospects, it also introduces volatility. Investors should monitor sector trends and be prepared to rebalance if necessary, ensuring that the portfolio remains aligned with their risk tolerance and investment objectives.

Regions Info

  • North America
    67%
  • Europe Developed
    9%
  • Asia Emerging
    6%
  • Japan
    4%
  • Asia Developed
    3%
  • Australasia
    1%
  • Africa/Middle East
    1%

The portfolio's geographic allocation is predominantly focused on North America, representing 66.6% of the holdings. This concentration offers stability but also limits exposure to growth opportunities in other regions. With smaller allocations to Europe, Asia, and emerging markets, there is some international diversification. Expanding geographic exposure can enhance growth potential and reduce region-specific risks. It's beneficial to periodically assess the global economic landscape and adjust geographic allocations to capitalize on evolving opportunities and mitigate risks.

Redundant positions Info

  • iShares Core Aggressive Allocation ETF
    iShares Core Growth Allocation ETF
    Vanguard Total Stock Market Index Fund ETF Shares
    High correlation
  • iShares Global Healthcare ETF
    Vanguard Health Care Index Fund ETF Shares
    High correlation
  • iShares Global Tech ETF
    Vanguard Information Technology Index Fund ETF Shares
    High correlation
  • iShares Global REIT ETF
    Vanguard Real Estate Index Fund ETF Shares
    High correlation

The portfolio contains groups of highly correlated assets, such as those in aggressive and growth allocation ETFs, as well as tech and healthcare sectors. High correlation means these assets tend to move in the same direction, which can reduce diversification benefits. While some correlation is expected, excessive overlap can increase risk. Identifying and minimizing these overlaps can enhance diversification and improve risk management. Consider replacing highly correlated assets with alternatives that offer distinct performance characteristics to optimize the portfolio's risk-return profile.

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.

Utilizing the Efficient Frontier, the portfolio can be optimized by adjusting asset allocations to achieve the best possible risk-return ratio. Currently, the portfolio has overlapping assets with high correlations, which can be streamlined to enhance efficiency. By reallocating investments among existing assets, one can potentially improve returns without increasing risk. This process involves identifying underperforming or redundant assets and reallocating to those offering better diversification and growth prospects, thereby maximizing the portfolio's potential within its current framework.

Dividends Info

  • iShares Core Aggressive Allocation ETF 2.10%
  • iShares Core Conservative Allocation ETF 3.00%
  • iShares Core Moderate Allocation ETF 2.90%
  • iShares Core Growth Allocation ETF 2.50%
  • Vanguard Total Bond Market Index Fund ETF Shares 3.60%
  • Vanguard Total International Bond Index Fund ETF Shares 4.80%
  • iShares U.S. Aerospace & Defense ETF 0.90%
  • iShares Global Healthcare ETF 1.40%
  • iShares Global Tech ETF 0.40%
  • iShares Global REIT ETF 2.90%
  • Vanguard Information Technology Index Fund ETF Shares 0.50%
  • Vanguard Health Care Index Fund ETF Shares 1.20%
  • Vanguard Industrials Index Fund ETF Shares 0.80%
  • Vanguard Real Estate Index Fund ETF Shares 4.10%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Vanguard Total International Stock Index Fund ETF Shares 1.60%
  • Weighted yield (per year) 2.10%

The portfolio's overall dividend yield is 2.1%, with contributions from various ETFs. Bonds and real estate funds offer higher yields, providing steady income. Dividends can be a reliable source of returns, especially in volatile markets. Reinvesting dividends can compound growth over time, enhancing long-term returns. It's important to monitor dividend yields and ensure they align with income needs and investment goals. Adjustments might be necessary if yield levels change or if income generation becomes a priority.

Ongoing product costs Info

  • iShares Core Aggressive Allocation ETF 0.15%
  • iShares Core Conservative Allocation ETF 0.15%
  • iShares Core Moderate Allocation ETF 0.15%
  • iShares Core Growth Allocation ETF 0.15%
  • Vanguard Total Bond Market Index Fund ETF Shares 0.03%
  • Vanguard Total International Bond Index Fund ETF Shares 0.07%
  • iShares MSCI India ETF 0.65%
  • iShares U.S. Aerospace & Defense ETF 0.40%
  • iShares Global Healthcare ETF 0.42%
  • iShares Global Tech ETF 0.41%
  • iShares Global REIT ETF 0.14%
  • Vanguard Information Technology Index Fund ETF Shares 0.10%
  • Vanguard Health Care Index Fund ETF Shares 0.10%
  • Vanguard Industrials Index Fund ETF Shares 0.10%
  • Vanguard Real Estate Index Fund ETF Shares 0.12%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.17%

The portfolio's total expense ratio (TER) is 0.17%, indicating relatively low costs. Lower fees can significantly boost long-term returns by reducing the drag on performance. While most ETFs in the portfolio have low expense ratios, a few, like the iShares MSCI India ETF, have higher costs. It's beneficial to regularly review fees and consider lower-cost alternatives if available, ensuring that expenses don't unnecessarily erode returns. Keeping costs in check is a simple yet effective way to enhance the portfolio's performance.

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