A balanced portfolio with strong US exposure and moderate dividend yield

Report created on Dec 31, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio consists of four ETFs, focusing heavily on US equities with a 40% allocation in the Vanguard S&P 500 ETF and a 20% allocation in the Invesco QQQ Trust. The Schwab U.S. Dividend Equity ETF and Vanguard Total International Stock Index Fund ETF Shares each make up 20% of the portfolio. This composition reflects a diversified approach, balancing between growth and income-generating assets. Compared to typical balanced portfolios, it leans more towards equities, which may increase potential returns but also risk.

Growth Info

Historically, the portfolio has performed well, with a Compound Annual Growth Rate (CAGR) of 13.3%. This is impressive when compared to common benchmarks like the S&P 500. However, it also experienced a significant maximum drawdown of -32.07%, indicating substantial volatility during downturns. Understanding past performance is crucial, but remember that it doesn't guarantee future results. To mitigate potential losses, consider diversifying further or adjusting allocations to include more stable assets.

Projection Info

The forward projection, using Monte Carlo simulations, suggests a wide range of potential outcomes. With 1,000 simulations, the portfolio's annualized return is 14.11%, and 991 simulations show positive returns. The 5th percentile indicates a potential 53.4% growth, while the 67th percentile suggests a 590.9% increase. While these projections are based on historical data, they provide a glimpse into possible future performance. It's important to remember that these are estimates, and actual results can vary.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio is heavily weighted towards stocks, with 99.33% in equities and a minimal allocation in cash and other assets. This high equity exposure aligns with a growth-oriented strategy but may lack the diversification benefits of including bonds or alternative assets. Comparing this to a typical balanced portfolio, which might include a mix of stocks and bonds, suggests a potential area for improvement. Consider incorporating other asset classes to reduce risk and enhance stability.

Sectors Info

  • Technology
    28%
  • Financials
    14%
  • Consumer Discretionary
    12%
  • Health Care
    10%
  • Telecommunications
    9%
  • Industrials
    9%
  • Consumer Staples
    7%
  • Energy
    5%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    2%

Sector allocation shows a significant concentration in technology at 28.18%, followed by financial services and consumer cyclicals. This concentration might lead to higher volatility, especially during sector-specific downturns. Compared to benchmarks, this portfolio is tech-heavy, which could be beneficial during tech booms but risky during interest rate hikes. Diversifying sector exposure could mitigate these risks and provide more balanced growth opportunities.

Regions Info

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

Geographically, the portfolio is concentrated in North America, with 80.79% exposure, which limits international diversification. While this aligns with a focus on US markets, it may miss growth opportunities in emerging markets. Compared to global benchmarks, the portfolio is underexposed to regions like Asia and Latin America. Expanding geographic exposure could enhance diversification and reduce region-specific risks, offering a more balanced global perspective.

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 is well-positioned on the Efficient Frontier, indicating a strong risk-return balance given its current asset allocation. However, further optimization could be achieved by adjusting the weightings among existing assets. This involves reallocating to maximize returns for the given level of risk. While the current setup is efficient, exploring minor adjustments could enhance performance without significantly altering the risk profile.

Dividends Info

  • Invesco QQQ Trust 0.60%
  • Schwab U.S. Dividend Equity ETF 3.70%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.40%
  • Weighted yield (per year) 2.02%

The portfolio's dividend yield is 2.02%, with the Schwab U.S. Dividend Equity ETF contributing the most at 3.7%. Dividends provide a steady income stream, which can be reinvested for compounding growth. For investors seeking income, these yields are attractive. However, focusing solely on dividends may limit growth potential. Balancing between dividend-paying and growth-focused assets can optimize both income and capital appreciation.

Ongoing product costs Info

  • Invesco QQQ Trust 0.20%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.08%

The portfolio's total expense ratio (TER) is 0.08%, which is impressively low and supports better long-term performance. Lower costs mean more of your returns stay in your pocket, enhancing compounding effects over time. Compared to industry averages, this cost structure is efficient. Regularly reviewing and minimizing costs is crucial, but this portfolio is already well-optimized in this regard, contributing positively to overall returns.

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