A moderately diversified cautious portfolio with a strong focus on North American equities

Report created on Dec 7, 2024

Risk profile Info

3/7
Cautious
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

This portfolio consists predominantly of ETFs, with a small allocation to common stocks. The most significant holdings are broad market ETFs, with allocations around 9-10%, indicating a preference for diversified market exposure. The portfolio also includes smaller positions in sector-specific and bond ETFs, reflecting a cautious approach. A notable cash allocation of 8% provides liquidity. This composition suggests a balanced strategy that seeks to mitigate risk while capturing broad market movements.

Growth Info

Historically, the portfolio has delivered a CAGR of 18.25%, with a maximum drawdown of -9.66%. This performance indicates resilience and growth, even in volatile markets. However, it's important to remember that past performance doesn't guarantee future results. The portfolio's ability to recover from drawdowns quickly suggests a well-constructed asset mix, but ongoing monitoring and adjustments may be necessary to maintain this performance.

Projection Info

Using Monte Carlo simulations, the portfolio's future performance is projected with a median return of 796%. This model uses historical data to simulate thousands of potential outcomes, providing insight into possible future returns. However, it's crucial to note that these projections are based on past data and assumptions, which may not hold true in the future. Regularly reviewing and adjusting the portfolio can help align it with changing market conditions and personal goals.

Asset classes Info

  • Stocks
    82%
  • Bonds
    9%
  • Cash
    8%
  • Real Estate
    1%

The portfolio is heavily weighted towards stocks, making up nearly 82% of the allocation, with bonds and cash comprising about 17.5%. This allocation suggests a focus on growth, with bonds providing some stability. However, the limited exposure to other asset classes like real estate and alternatives may reduce diversification benefits. Consider diversifying further to mitigate risks associated with market fluctuations and enhance long-term stability.

Sectors Info

  • Technology
    15%
  • Consumer Discretionary
    14%
  • Financials
    11%
  • Industrials
    10%
  • Consumer Staples
    9%
  • Energy
    7%
  • Health Care
    6%
  • Telecommunications
    5%
  • Basic Materials
    2%
  • Real Estate
    2%
  • Utilities
    2%

The portfolio shows significant exposure to technology and consumer cyclicals, which together account for nearly 29% of the total allocation. While these sectors can offer high growth potential, they also come with increased volatility. Balancing this exposure with more defensive sectors, such as utilities or consumer staples, could provide greater stability. Assessing sector allocations regularly ensures alignment with risk tolerance and market conditions.

Regions Info

  • North America
    67%
  • Europe Developed
    8%
  • Japan
    3%
  • Asia Emerging
    2%
  • Asia Developed
    1%
  • Australasia
    1%

With over 67% of assets in North America, the portfolio is heavily skewed towards this region. This concentration may limit the benefits of geographic diversification, exposing the portfolio to regional economic risks. To enhance diversification, consider increasing exposure to other regions like Europe, Asia, or emerging markets. This strategy can help capture global growth opportunities and reduce reliance on any single market.

Redundant positions Info

  • Vanguard Total International Stock Index Fund ETF Shares
    Vanguard FTSE Developed Markets Index Fund ETF Shares
    Vanguard International High Dividend Yield Index Fund ETF Shares
    Schwab International Equity ETF
    Schwab Fundamental International Large Company Index ETF
    High correlation
  • Vanguard Total Stock Market Index Fund ETF Shares
    Schwab U.S. Large-Cap ETF
    Vanguard S&P 500 ETF
    JPMorgan U.S. Momentum Factor ETF
    Schwab 1000 ETF
    Schwab U.S. Broad Market ETF
    High correlation
  • Schwab U.S. Mid-Cap ETF
    SPDR® S&P 600 Small Cap Growth ETF
    Schwab U.S. Small-Cap ETF
    High correlation
  • Schwab U.S. Dividend Equity ETF
    Vanguard High Dividend Yield Index Fund ETF Shares
    Vanguard Mid-Cap Value Index Fund ETF Shares
    Vanguard Value Index Fund ETF Shares
    Schwab U.S. Large-Cap Value ETF
    High correlation
  • Schwab 5-10 Year Corporate Bond ETF
    SPDR Portfolio Corporate Bond
    Vanguard Long-Term Corporate Bond Index Fund ETF Shares
    High correlation
  • Vanguard Long-Term Treasury Index Fund ETF Shares
    SPDR Barclays Long Term Treasury
    High correlation

The portfolio contains several highly correlated asset groups, indicating limited diversification benefits. Assets that move in tandem can increase portfolio volatility during market downturns. Identifying and reducing these overlaps can improve risk management. By diversifying into less correlated assets, you can enhance the portfolio's resilience and potentially improve its risk-adjusted returns.

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.

An analysis of the Efficient Frontier suggests that the portfolio can be optimized for a better risk-return ratio. By adjusting the current asset allocation, the portfolio's expected return could increase to 5.16% with the same risk level. This optimization focuses on improving efficiency, not necessarily diversification. Regularly reviewing and adjusting the allocation can help maintain an optimal balance between risk and return.

Dividends Info

  • Corebridge Financial Inc. 2.90%
  • Schwab Fundamental International Large Company Index ETF 0.90%
  • Fidelity® MSCI Consumer Staples Index ETF 2.30%
  • Invesco S&P International Developed Quality ETF 2.10%
  • JPMorgan U.S. Momentum Factor ETF 0.70%
  • Primoris Services Corporation 0.30%
  • Invesco QQQ Trust 0.60%
  • Schwab U.S. Small-Cap ETF 1.40%
  • Schwab U.S. Broad Market ETF 0.80%
  • Schwab U.S. Dividend Equity ETF 2.50%
  • Schwab International Equity ETF 0.90%
  • Schwab U.S. REIT ETF 1.90%
  • Schwab 5-10 Year Corporate Bond ETF 6.20%
  • Schwab 1-5 Year Corporate Bond ETF 4.80%
  • Schwab 1000 ETF 1.10%
  • Schwab U.S. Mid-Cap ETF 2.80%
  • Schwab U.S. Large-Cap Value ETF 1.50%
  • Schwab U.S. Large-Cap ETF 2.00%
  • SPDR® S&P 600 Small Cap Growth ETF 1.00%
  • SPDR Portfolio Corporate Bond 4.70%
  • SPDR Barclays Long Term Treasury 3.40%
  • Rbb Fund Inc - Us Treasury 3 Month Bill ETF 4.70%
  • Vanguard Long-Term Corporate Bond Index Fund ETF Shares 4.50%
  • Vanguard Consumer Discretionary Index Fund ETF Shares 0.70%
  • Vanguard Energy Index Fund ETF Shares 3.10%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 3.00%
  • Vanguard Long-Term Treasury Index Fund ETF Shares 3.70%
  • Vanguard Mid-Cap Value Index Fund ETF Shares 2.00%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Vanguard Value Index Fund ETF Shares 2.20%
  • Vanguard Emerging Markets Government Bond Index Fund ETF Shares 5.30%
  • Vanguard Total International Stock Index Fund ETF Shares 2.90%
  • Vanguard High Dividend Yield Index Fund ETF Shares 2.70%
  • Vanguard International High Dividend Yield Index Fund ETF Shares 4.50%
  • Weighted yield (per year) 2.16%

The portfolio's dividend yield stands at 2.16%, providing a moderate income stream. While dividends can enhance total returns, relying solely on dividend-paying stocks may limit growth potential. Consider balancing dividend-focused investments with growth-oriented ones to achieve a more comprehensive return profile. This approach can support both income generation and capital appreciation over time.

Ongoing product costs Info

  • Schwab Fundamental International Large Company Index ETF 0.25%
  • Fidelity® MSCI Consumer Staples Index ETF 0.08%
  • Invesco S&P International Developed Quality ETF 0.29%
  • U.S. Global Jets ETF 0.60%
  • JPMorgan U.S. Momentum Factor ETF 0.12%
  • Invesco QQQ Trust 0.20%
  • Schwab U.S. Small-Cap ETF 0.04%
  • Schwab U.S. Broad Market ETF 0.03%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Schwab International Equity ETF 0.06%
  • Schwab U.S. REIT ETF 0.07%
  • Schwab 5-10 Year Corporate Bond ETF 0.03%
  • Schwab 1-5 Year Corporate Bond ETF 0.03%
  • Schwab 1000 ETF 0.05%
  • Schwab U.S. Mid-Cap ETF 0.04%
  • Schwab U.S. Large-Cap Value ETF 0.04%
  • Schwab U.S. Large-Cap ETF 0.03%
  • SPDR® S&P 600 Small Cap Growth ETF 0.15%
  • SPDR Portfolio Corporate Bond 0.03%
  • SPDR Barclays Long Term Treasury 0.03%
  • Rbb Fund Inc - Us Treasury 3 Month Bill ETF 0.15%
  • Vanguard Long-Term Corporate Bond Index Fund ETF Shares 0.04%
  • Vanguard Consumer Discretionary Index Fund ETF Shares 0.10%
  • Vanguard Energy Index Fund ETF Shares 0.10%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 0.05%
  • Vanguard Long-Term Treasury Index Fund ETF Shares 0.04%
  • Vanguard Mid-Cap Value Index Fund ETF Shares 0.07%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard Value Index Fund ETF Shares 0.04%
  • Vanguard Emerging Markets Government Bond Index Fund ETF Shares 0.20%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Vanguard High Dividend Yield Index Fund ETF Shares 0.06%
  • Vanguard International High Dividend Yield Index Fund ETF Shares 0.22%
  • Weighted costs total (per year) 0.09%

The total expense ratio (TER) of the portfolio is 0.09%, indicating a cost-effective structure. Low costs can significantly enhance long-term returns by reducing the drag on performance. However, it's essential to regularly review expense ratios, especially for funds with higher fees, to ensure they align with the value they provide. Consider replacing high-cost funds with similar, lower-cost alternatives to improve cost efficiency.

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