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A balanced portfolio emphasizing US equities with moderate diversification and bond exposure

Report created on Apr 8, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification
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Positions

The portfolio is predominantly composed of equity ETFs, making up 66% of the total allocation, with a significant focus on US markets. Bonds account for 23%, providing a cushion against equity volatility. This composition aligns well with a balanced portfolio, offering growth potential while managing risk. However, the equity focus is heavily skewed towards US markets, which may limit diversification benefits. Consider increasing exposure to international equities to enhance diversification and mitigate regional risks.

Growth Info

Historically, the portfolio has achieved a CAGR of 5.99%, indicating steady growth over time. The maximum drawdown of -26.60% highlights the potential risk during market downturns. Compared to benchmarks, this performance is moderate, reflecting the balanced nature of the portfolio. It's essential to remember that past performance doesn't guarantee future results. To potentially enhance returns, consider reviewing asset allocations, particularly the equities, to ensure they are aligned with current market conditions and your risk tolerance.

Projection Info

Using Monte Carlo simulations, the portfolio's future performance was estimated across 1,000 scenarios. The median outcome suggests a 26.7% increase, while the best-case scenario projects a 113.1% gain. However, the worst-case scenario shows a significant drop of -84.1%. This wide range underscores the uncertainty inherent in market predictions. Remember, these projections are based on historical data and assumptions that may not hold. Regularly reviewing and adjusting your portfolio can help mitigate risks and seize opportunities as market conditions evolve.

Asset classes Info

  • Stocks
    66%
  • Bonds
    23%
  • Real Estate
    4%

The portfolio's asset allocation leans heavily towards stocks, with bonds and real estate providing additional layers of diversification. Compared to typical benchmarks, the bond allocation is slightly higher, offering stability and income potential. However, the real estate exposure is relatively low, which might limit diversification benefits. Consider increasing allocation to alternative asset classes, such as real estate or commodities, to enhance diversification. This approach can help reduce overall portfolio volatility and improve long-term returns.

Sectors Info

  • Technology
    21%
  • Consumer Discretionary
    10%
  • Financials
    9%
  • Telecommunications
    7%
  • Health Care
    6%
  • Real Estate
    5%
  • Industrials
    4%
  • Consumer Staples
    4%
  • Energy
    2%
  • Utilities
    1%
  • Basic Materials
    1%

The sector allocation shows a strong emphasis on technology, which accounts for 21% of the portfolio. This concentration could lead to higher volatility, especially during periods of tech sector instability. Other sectors like consumer cyclicals and financial services provide some balance. Aligning sector weights with broader market benchmarks can help mitigate sector-specific risks. Consider diversifying into underrepresented sectors, such as energy or utilities, to enhance stability and resilience against sector downturns.

Regions Info

  • North America
    64%
  • Europe Developed
    2%
  • Asia Developed
    1%
  • Asia Emerging
    1%
  • Japan
    1%

Geographically, the portfolio is heavily concentrated in North America, comprising 64% of the allocation. This focus may limit exposure to growth opportunities in other regions. Compared to global benchmarks, the portfolio underrepresents Europe and emerging markets. Expanding geographic diversification can help capture growth in developing economies and reduce reliance on North American markets. Consider increasing exposure to international equities, particularly in Europe and Asia, to balance regional risks and opportunities.

Market capitalization Info

  • Mega-cap
    30%
  • Large-cap
    26%
  • Mid-cap
    13%
  • No data
    7%
  • Small-cap
    1%

The portfolio's market capitalization is predominantly in mega and big-cap stocks, representing 56% of the allocation. This focus on large companies provides stability but may limit growth potential. Medium and small-cap stocks offer opportunities for higher returns, albeit with increased risk. To enhance growth prospects, consider gradually increasing exposure to smaller-cap stocks. This approach can capture potential gains from emerging companies while maintaining a balanced risk profile.

Redundant positions Info

  • Vanguard Intermediate-Term Bond Index Fund ETF Shares
    iShares 5-10 Year Investment Grade Corporate Bond ETF
    Fidelity® Total Bond ETF
    High correlation
  • SPDR® Portfolio S&P 500 ETF
    SoFi Select 500
    Invesco NASDAQ 100 ETF
    Vanguard Total Stock Market Index Fund ETF Shares
    High correlation
  • Vanguard FTSE Developed Markets Index Fund ETF Shares
    Vanguard Total International Stock Index Fund ETF Shares
    High correlation

The portfolio contains several highly correlated asset groups, such as US equity ETFs and bond ETFs. High correlation means these assets tend to move in the same direction, reducing diversification benefits. During market downturns, this can lead to increased volatility. Consider diversifying into assets with lower correlation to enhance risk management. This could involve incorporating alternative investments or adjusting the balance between equities and bonds to achieve a more diversified portfolio.

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.

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The portfolio's current risk-return profile could be optimized using the Efficient Frontier, which identifies the best possible risk-return ratio. However, the presence of highly correlated assets suggests potential for improvement. By reducing overlap and reallocating to less correlated assets, the portfolio could achieve a higher expected return with similar risk levels. This optimization doesn't mean diversifying into new asset classes but rather adjusting allocations within existing ones to enhance efficiency.

Dividends Info

  • Vanguard Intermediate-Term Bond Index Fund ETF Shares 3.20%
  • iShares MSCI Emerging Markets ETF 0.70%
  • Fidelity® Total Bond ETF 3.50%
  • Barclays ETN+ FI Enhanced Europe 50 ETN Series B 1.80%
  • iShares 5-10 Year Investment Grade Corporate Bond ETF 4.10%
  • Invesco NASDAQ 100 ETF 0.70%
  • SoFi Select 500 0.60%
  • SPDR® Portfolio S&P 500 ETF 1.50%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 3.10%
  • Vanguard Long-Term Treasury Index Fund ETF Shares 4.30%
  • Vanguard Real Estate Index Fund ETF Shares 4.40%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.40%
  • Vanguard Total International Stock Index Fund ETF Shares 3.40%
  • Verizon Communications Inc 6.30%
  • Consumer Discretionary Select Sector SPDR® Fund 0.70%
  • Weighted yield (per year) 2.12%

The portfolio's dividend yield stands at 2.12%, providing a modest income stream. Bond ETFs contribute significantly to this yield, with some offering over 4%. Dividends can enhance total returns, especially in a low-interest-rate environment. To increase income, consider reallocating towards higher-yielding assets, such as dividend-focused equity ETFs or real estate investment trusts (REITs). However, ensure that the pursuit of yield aligns with your overall investment strategy and risk tolerance.

Ongoing product costs Info

  • Vanguard Intermediate-Term Bond Index Fund ETF Shares 0.04%
  • iShares MSCI Emerging Markets ETF 0.70%
  • Fidelity® Total Bond ETF 0.36%
  • Barclays ETN+ FI Enhanced Europe 50 ETN Series B 0.09%
  • iShares 5-10 Year Investment Grade Corporate Bond ETF 0.04%
  • Invesco NASDAQ 100 ETF 0.15%
  • SoFi Select 500 0.05%
  • SPDR® Portfolio S&P 500 ETF 0.02%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 0.05%
  • Vanguard Long-Term Treasury Index Fund ETF Shares 0.04%
  • 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 0.05%
  • Consumer Discretionary Select Sector SPDR® Fund 0.09%
  • Weighted costs total (per year) 0.06%

The overall portfolio cost is impressively low, with a Total Expense Ratio (TER) of 0.06%. This cost efficiency supports better long-term performance by minimizing the drag on returns. Most ETFs in the portfolio have low expense ratios, contributing to this favorable cost structure. Maintaining low costs is crucial for optimizing returns, so continue to monitor and manage expenses. Consider replacing higher-cost funds with lower-cost alternatives if they align with your investment strategy and objectives.

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