A highly secure portfolio with a strong focus on short-term treasury bonds

Report created on Jan 1, 2025

Risk profile Info

1/7
Secure
Less risk More risk

Diversification profile Info

1/5
Single-Focused
Less diversification More diversification

Positions

This portfolio is predominantly composed of short-term treasury bonds, with 96.6% allocated to the iShares® 0-3 Month Treasury Bond ETF. The remaining small allocations are spread across three other ETFs, each comprising less than 2% of the portfolio. This composition suggests a very conservative investment approach, primarily focused on capital preservation. Typically, a more diversified portfolio would include a broader range of asset types. For those aiming to enhance diversification, considering a slight increase in equity or alternative asset exposure could be beneficial.

Growth Info

Historically, this portfolio has demonstrated a CAGR of 2.81%, indicating modest growth over time. With a maximum drawdown of just -0.2%, it has maintained stability even during market fluctuations, aligning with its secure risk profile. This performance is consistent with the portfolio's heavy reliance on short-term treasury bonds, which are known for their stability but limited growth potential. For investors seeking higher returns, it may be worth exploring additional asset classes that offer growth opportunities, while still maintaining a low-risk profile.

Projection Info

The Monte Carlo simulation, which uses historical data to predict future outcomes, suggests an annualized return of 9.32% across 1,000 simulations. This indicates potential for growth, albeit with a conservative base. However, it's important to note that simulations rely on past data and cannot guarantee future results. To potentially enhance future returns, consider gradually introducing more growth-oriented assets while monitoring risk levels. Balancing the portfolio's conservative nature with slight growth exposure could optimize long-term outcomes.

Asset classes Info

  • Cash
    98%
  • Bonds
    2%
  • Stocks
    1%

The portfolio's asset class distribution is heavily skewed towards cash and short-term bonds, comprising over 97% of the allocation. This indicates a lack of diversification across asset classes, which could limit growth potential. Compared to common benchmarks, which often include a mix of equities and bonds, this portfolio is extremely conservative. To improve diversification, consider incorporating a wider range of asset classes, such as equities or real estate, which could provide better risk-adjusted returns over time.

Sectors Info

Sectoral exposure is minimal, with no sector comprising more than 0.2% of the portfolio. This suggests a lack of strategic sector allocation, which can be an effective tool for managing risk and capitalizing on growth trends. For example, sectors like technology and healthcare often offer growth potential but come with higher volatility. Introducing targeted sector ETFs could help balance the portfolio, providing exposure to sectors that align with an investor's risk tolerance and growth objectives.

Regions Info

  • North America
    1%

Geographic allocation is almost entirely focused on North America, with negligible exposure to other regions. This lack of geographic diversification could limit potential growth and increase vulnerability to regional economic downturns. Common benchmarks often include a mix of global equities to mitigate region-specific risks. Expanding geographic exposure, perhaps through international ETFs, could enhance diversification and provide access to growth opportunities in emerging markets, aligning with a more balanced investment strategy.

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's current allocation may not sit on the Efficient Frontier, which represents the optimal risk-return trade-off. The Efficient Frontier is a concept that helps investors understand the best possible returns for a given level of risk. By adjusting the mix of assets within the portfolio, it could be possible to achieve a more efficient risk-return balance. Consider consulting with a financial advisor to explore potential rebalancing strategies that align with personal investment goals and risk tolerance.

Dividends Info

  • Direxion Auspice Broad Commodity Strategy ETF 3.30%
  • iShares® 0-3 Month Treasury Bond ETF 5.10%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Weighted yield (per year) 4.98%

The portfolio's total dividend yield stands at 4.98%, primarily driven by the iShares® 0-3 Month Treasury Bond ETF's 5.1% yield. Dividend income can provide a steady cash flow, which is beneficial for conservative investors focused on income generation. However, the reliance on a single source for dividends could be risky. Exploring additional dividend-paying assets could diversify income sources and potentially increase overall yield, providing a more stable income stream.

Ongoing product costs Info

  • Direxion Auspice Broad Commodity Strategy ETF 0.80%
  • iShares® 0-3 Month Treasury Bond ETF 0.07%
  • WisdomTree Bloomberg U.S. Dollar Bullish Fund 0.50%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.09%

The total expense ratio (TER) of the portfolio is 0.09%, which is impressively low and supports better long-term performance by reducing the drag on returns. This cost efficiency is a positive aspect, as lower fees mean more of the portfolio's returns are retained by the investor. Maintaining a focus on low-cost ETFs is advisable, but it's also worth reviewing the cost-benefit of each holding to ensure they align with investment goals and provide value for the expense incurred.

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