A Balanced Portfolio with Low Diversity and Strong Historical Performance Focused on S&P 500

Report created on Nov 26, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

The portfolio is solely composed of the Vanguard S&P 500 ETF, making it highly concentrated. This means the portfolio lacks diversification, as it relies entirely on the performance of the S&P 500 index. While this ETF covers a broad range of sectors, the lack of other asset classes could expose the portfolio to higher risk if the U.S. market underperforms. To mitigate this risk, it might be beneficial to consider adding different asset classes or funds to the portfolio to enhance diversification and stability.

Growth Info

Historically, the portfolio has delivered strong performance, with a CAGR of 14.12%. This indicates that the portfolio has grown significantly over time. However, it also experienced a maximum drawdown of -34.01%, highlighting potential vulnerability during market downturns. The impressive growth is a testament to the robust performance of the S&P 500, but the significant drawdown emphasizes the need for caution. To maintain growth while managing risk, consider strategies that could help cushion the impact of future downturns.

Projection Info

Using a Monte Carlo simulation, which models potential future outcomes based on historical data, the portfolio shows promising projections. With an annualized return of 15.35% and a 50th percentile outcome of 538.52%, the potential for growth is evident. However, the 5th percentile indicates a minimal return of 99.41%, suggesting some downside risk. While these projections are encouraging, it's essential to remember that past performance doesn't guarantee future results. Regularly reviewing and adjusting the portfolio can help align with changing market conditions and personal goals.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily invested in stocks, with over 99% allocation, and a negligible amount in cash. This concentration in equities suggests a higher risk exposure, as stocks can be more volatile compared to other asset classes like bonds or real estate. While this allocation can lead to higher returns, it also increases vulnerability during market downturns. To achieve a more balanced risk profile, consider diversifying into other asset classes, which could provide stability and reduce overall portfolio volatility.

Sectors Info

  • Technology
    33%
  • Financials
    13%
  • Health Care
    11%
  • Consumer Discretionary
    10%
  • Telecommunications
    9%
  • Industrials
    8%
  • Consumer Staples
    6%
  • Energy
    3%
  • Utilities
    3%
  • Real Estate
    2%
  • Basic Materials
    2%

Sector allocation within the portfolio is diverse, covering major sectors of the U.S. economy. Technology holds the largest share at 33%, followed by Financial Services and Healthcare. This sector spread provides exposure to various economic drivers, but the heavy reliance on technology could pose a risk if this sector underperforms. To manage sector-specific risks, consider periodically reviewing sector allocations and making adjustments to ensure a balanced approach that aligns with market trends and personal risk tolerance.

Regions Info

  • North America
    99%
  • Europe Developed
    1%

Geographically, the portfolio is almost entirely focused on North America, with a small fraction in Europe and Asia. This U.S.-centric approach benefits from the stability and growth potential of the American market but lacks exposure to international markets, which can offer diversification benefits. By including investments from other regions, the portfolio could potentially reduce geographic risk and tap into growth opportunities in emerging or developed markets outside the U.S.

Dividends Info

  • Vanguard S&P 500 ETF 1.20%
  • Weighted yield (per year) 1.20%

The portfolio offers a modest dividend yield of 1.2%, primarily from the Vanguard S&P 500 ETF. While dividends provide a steady income stream, the yield is relatively low, reflecting the growth-focused nature of the underlying stocks. For those seeking higher income, exploring dividend-focused funds or stocks could be beneficial. However, balancing the need for income with growth potential is crucial, as higher dividends often come with different risk profiles and may impact overall portfolio returns.

Ongoing product costs Info

  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.03%

The portfolio benefits from low costs, with a total expense ratio of 0.03% from the Vanguard S&P 500 ETF. This is advantageous, as lower costs mean more of the portfolio's returns are retained by the investor. Keeping investment costs low is a key factor in optimizing long-term performance. While the current cost structure is efficient, it's important to regularly review and compare fees to ensure continued cost-effectiveness, especially if considering adding new funds or asset classes to the portfolio.

What next?

Ready to invest in this portfolio?

Select a broker that fits your needs and watch for low fees to maximize your returns.

Select broker

Create your own report?

Analyze your portfolio

Join our community!

Join Discord

The information provided on this platform is for informational purposes only and should not be considered as financial or investment advice. Insightfolio does not provide investment advice, personalized recommendations, or guidance regarding the purchase, holding, or sale of financial assets. The tools and content are intended for educational purposes only and are not tailored to individual circumstances, financial needs, or objectives.

Insightfolio assumes no liability for the accuracy, completeness, or reliability of the information presented. Users are solely responsible for verifying the information and making independent decisions based on their own research and careful consideration. Use of the platform should not replace consultation with qualified financial professionals.

Investments involve risks. Users should be aware that the value of investments may fluctuate and that past performance is not an indicator of future results. Investment decisions should be based on personal financial goals, risk tolerance, and independent evaluation of relevant information.

Insightfolio does not endorse or guarantee the suitability of any particular financial product, security, or strategy. Any projections, forecasts, or hypothetical scenarios presented on the platform are for illustrative purposes only and are not guarantees of future outcomes.

By accessing the services, information, or content offered by Insightfolio, users acknowledge and agree to these terms of the disclaimer. If you do not agree to these terms, please do not use our platform.

Instrument logos provided by Elbstream.

Help us improve Insightfolio

Your feedback makes a difference! Share your thoughts in our quick survey. Take the survey