Balanced portfolio with a strong focus on US equities and moderate risk tolerance
Report created on Jul 19, 2025Risk profile
4/7
Diversification profile
1/5
Positions
-
SP SPDR® Portfolio S&P 500 ETF
SPLG - US78464A8541 50.00% -
WT WisdomTree Trust - WisdomTree U.S. Quality Shareholder Yield Fund
WTV - US97717W5470 13.00% -
AV Avantis® U.S. Small Cap Value ETF
AVUV - US0250728773 12.00% -
JE JPMorgan Equity Premium Income ETF
JEPI - US46641Q3323 9.00% -
VG Vanguard Intermediate-Term Treasury Index Fund ETF Shares
VGIT - US92206C7065 8.00% -
VT Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares
VTIP - US9220208055 8.00%
This portfolio predominantly consists of U.S. equity ETFs, with a significant 50% allocation to a broad market S&P 500 ETF, indicating a strong tilt towards large-cap U.S. stocks. The remaining allocations are spread across various specialized ETFs, including quality shareholder yield, small-cap value, equity premium income, and treasury securities, reflecting a blend of growth, value, and income strategies within the equity component. The bond allocation, though smaller, introduces a conservative element, aiming to balance out the portfolio's risk profile. The portfolio's single-focused diversification score suggests room for greater variety in asset classes and geographic exposure.
Growth
Historically, the portfolio has demonstrated robust performance with a Compound Annual Growth Rate (CAGR) of 15.57%, alongside a maximum drawdown of -20.02%. These figures indicate a strong growth trajectory over the observed period, albeit with significant volatility, as evidenced by the substantial drawdown. The days contributing most to returns highlight the portfolio's susceptibility to market timing and volatility. Such performance metrics underscore the importance of understanding the balance between risk and return, especially for investors with a balanced risk profile.
Projection
Monte Carlo simulations project a wide range of outcomes, with the median scenario suggesting a 435.2% increase in value, which is optimistic. However, the 5th percentile outcome at 88.1% warns of potential downside risks. These simulations, while useful for illustrating possible future scenarios, are based on historical data and assumptions that may not capture future market dynamics. Investors should view these projections as one of many tools in decision-making, not as guarantees of future performance.
Asset classes
- Stocks 83%
- Bonds 16%
- No data 1%
- Cash 1%
The portfolio's 83% allocation to stocks versus 16% to bonds reflects a growth-oriented strategy with a moderate risk stance. The minimal allocations to 'Not Classified' and cash provide limited liquidity and diversification outside of stocks and bonds. This asset class distribution aligns with the portfolio's balanced risk classification but suggests an opportunity to enhance risk management and potential returns through increased diversification across alternative asset classes or more substantial cash holdings for opportunistic investments.
Sectors
- Technology 21%
- Financials 14%
- Consumer Discretionary 10%
- Industrials 9%
- Health Care 8%
- Telecommunications 7%
- Consumer Staples 6%
- Energy 4%
- Basic Materials 2%
- Utilities 2%
- Real Estate 2%
The sector allocation shows a heavy emphasis on technology and financial services, making up 35% of the portfolio. This concentration increases exposure to sector-specific risks, such as regulatory changes or economic cycles affecting these industries. While the inclusion of consumer cyclicals, industrials, and healthcare introduces some balance, the overall sectoral spread still leans heavily towards growth-oriented sectors. Diversifying into more defensive sectors or increasing allocations to underrepresented areas could provide a buffer during market downturns.
Regions
- North America 83%
- Europe Developed 1%
With 83% of assets allocated to North America, the portfolio's geographic exposure is highly concentrated, potentially increasing vulnerability to region-specific economic downturns or political events. The negligible exposure to developed Europe and a complete absence of investments in emerging markets, Asia, and other regions limit the portfolio's global diversification. Expanding geographic exposure could mitigate risks associated with regional economic cycles and capitalize on growth opportunities in emerging and developed markets outside of North America.
Market capitalization
- Mega-cap 26%
- Large-cap 24%
- Mid-cap 18%
- Small-cap 9%
- Micro-cap 6%
The market capitalization breakdown shows a balanced mix across mega, big, and medium-sized companies, with a smaller emphasis on small and micro-cap stocks. This distribution suggests a moderate risk approach, leveraging the stability of larger companies while seeking growth opportunities in smaller firms. However, the relatively lower allocation to small and micro-cap stocks might limit potential high-growth opportunities. Considering a slight increase in these categories could enhance long-term growth prospects while introducing additional 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.
Considering the Efficient Frontier, the portfolio appears to be positioned towards a more risk-averse side, given its substantial allocation to large-cap U.S. equities and bonds. However, the potential for optimization exists by adjusting the allocation towards assets with higher expected returns for a given level of risk. This process might involve diversifying into alternative asset classes or rebalancing sector and geographic exposures to achieve a more efficient risk-return ratio. It's important to note that such optimization should align with the investor's risk tolerance and investment horizon.
Dividends
- Avantis® U.S. Small Cap Value ETF 1.70%
- JPMorgan Equity Premium Income ETF 8.30%
- SPDR® Portfolio S&P 500 ETF 1.20%
- Vanguard Intermediate-Term Treasury Index Fund ETF Shares 3.80%
- Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares 2.70%
- WisdomTree Trust - WisdomTree U.S. Quality Shareholder Yield Fund 1.50%
- Weighted yield (per year) 2.27%
The portfolio's dividend yield stands at 2.27%, contributed by both equity and bond ETFs. This yield indicates a moderate income component, complementing the portfolio's growth strategy. The high yield from the Equity Premium Income ETF suggests a focus on income generation through equities. While the current yield supports the portfolio's balanced approach, investors might consider rebalancing towards higher-yielding assets or diversifying income sources to enhance yield without significantly increasing risk.
Ongoing product costs
- Avantis® U.S. Small Cap Value ETF 0.25%
- JPMorgan Equity Premium Income ETF 0.35%
- SPDR® Portfolio S&P 500 ETF 0.02%
- Vanguard Intermediate-Term Treasury Index Fund ETF Shares 0.04%
- Vanguard Short-Term Inflation-Protected Securities Index Fund ETF Shares 0.04%
- WisdomTree Trust - WisdomTree U.S. Quality Shareholder Yield Fund 0.12%
- Weighted costs total (per year) 0.09%
The portfolio's total expense ratio (TER) of 0.09% is impressively low, which is beneficial for long-term performance as lower costs lead to greater compounding benefits. The varying costs among the ETFs, from 0.02% to 0.35%, highlight the importance of cost consideration in portfolio construction. Maintaining a focus on cost efficiency, especially when adding or rebalancing positions, can contribute positively to net returns over time.
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