Balanced Portfolio with Broad Diversification and Strong Historical Performance for Moderate Risk Tolerance

Report created on Dec 3, 2024

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

Positions

The portfolio is composed of three ETFs, with a significant allocation to the Vanguard S&P 500 ETF at 43%, followed by the Invesco NASDAQ 100 ETF at 29%, and the Vanguard Total International Stock Index Fund ETF Shares at 28%. This diversified mix provides exposure to both domestic and international markets. A balanced portfolio like this one is designed to offer growth potential while managing risk through diversification. By maintaining a mix of large-cap U.S. stocks and international equities, the portfolio benefits from the stability of established markets and the growth opportunities in emerging regions.

Growth Info

Historically, the portfolio has performed well, with a compound annual growth rate (CAGR) of 13.83%. This indicates strong returns over time, despite a maximum drawdown of -28.29%, which highlights the impact of market volatility. The portfolio's ability to recover and generate positive returns demonstrates its resilience and the effectiveness of its diversified approach. With only 18 days accounting for 90% of returns, this portfolio's performance underscores the importance of staying invested during volatile periods to capture these significant gains.

Projection Info

Using a Monte Carlo simulation with 1,000 iterations, the portfolio shows promising forward projections. Assuming a hypothetical initial investment, the median outcome (50th percentile) suggests a potential growth of 426.75%, with a 67th percentile outcome of 634.96%. The 5th percentile, however, indicates a more conservative growth of 75.98%. With 993 simulations showing positive returns, the portfolio's projected annualized return is 14.25%. These projections highlight the potential for continued growth, while also emphasizing the importance of being prepared for a range of outcomes due to market uncertainties.

Asset classes Info

  • Stocks
    100%

The portfolio is predominantly composed of stocks, accounting for 99.53% of the allocation. This heavy weighting in equities suggests a focus on capital appreciation, with minimal cash and other asset classes. While this concentration can lead to higher returns, it also increases exposure to market volatility. Diversifying further into other asset classes like bonds or real estate could potentially reduce risk and provide more stability during market downturns. Balancing the portfolio with a mix of asset classes can help achieve a more consistent performance over time.

Sectors Info

  • Technology
    33%
  • Consumer Discretionary
    11%
  • Financials
    11%
  • Telecommunications
    10%
  • Health Care
    9%
  • Industrials
    8%
  • Consumer Staples
    6%
  • Basic Materials
    3%
  • Energy
    3%
  • Utilities
    2%
  • Real Estate
    2%

Sector allocation in the portfolio is diverse, with technology leading at 32.64%, followed by consumer cyclicals and financial services. This composition reflects a tilt towards growth-oriented sectors, which have historically driven market performance. However, the concentration in technology may introduce sector-specific risks. By maintaining a balanced sector allocation, the portfolio can mitigate these risks and capture opportunities across different economic cycles. Periodically reviewing sector weights and adjusting as needed can help maintain a well-rounded portfolio that aligns with broader market trends.

Regions Info

  • North America
    73%
  • Europe Developed
    11%
  • Asia Emerging
    5%
  • Japan
    4%
  • Asia Developed
    3%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is heavily weighted towards North America, representing 73.22% of the allocation. This focus on the U.S. market provides exposure to one of the world's largest and most stable economies. However, international diversification is present, with allocations in Europe, Asia, and other regions. Expanding exposure to emerging markets could enhance growth potential and reduce reliance on a single geographic area. A well-diversified geographic allocation can help capture opportunities in different regions and provide a buffer against regional economic fluctuations.

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.

Portfolio optimization suggests potential for risk adjustment along the efficient frontier. By reallocating assets, investors can shift towards a riskier or more conservative profile. For those seeking higher returns, increasing exposure to growth-oriented equities may be beneficial. Conversely, adding more conservative assets like bonds can reduce volatility. While the current portfolio is broadly diversified, focusing on optimizing risk-return balance can further enhance performance. Investors should consider their risk tolerance and financial goals when making adjustments, ensuring alignment with their overall investment strategy.

Dividends Info

  • Invesco NASDAQ 100 ETF 0.60%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.00%
  • Weighted yield (per year) 1.53%

The portfolio's dividend yield stands at 1.53%, with the Vanguard Total International Stock Index Fund ETF Shares contributing the highest yield at 3.0%. This provides a modest income stream, supplementing capital gains. While dividends are not the primary focus of this growth-oriented portfolio, they can offer a measure of stability and income during volatile periods. Investors seeking higher income may consider increasing exposure to dividend-paying assets. Balancing growth and income can enhance total returns and provide a more comprehensive investment strategy.

Ongoing product costs Info

  • Invesco NASDAQ 100 ETF 0.15%
  • 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%, reflecting low management costs across its holdings. This cost efficiency is beneficial, as lower fees can significantly impact long-term returns. The Vanguard S&P 500 ETF and Vanguard Total International Stock Index Fund ETF Shares are particularly cost-effective, with expense ratios of 0.03% and 0.08%, respectively. Keeping costs low is essential for maximizing net returns. Regularly reviewing and minimizing investment fees can enhance overall portfolio performance, allowing more of the returns to compound over time.

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