A balanced portfolio with strong U.S. equity focus and moderate diversification

Report created on Jan 18, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

This portfolio consists of 10 ETFs with a significant focus on U.S. equities, making up over 70% of the portfolio. Bonds contribute around 25%, with a small allocation to real estate. This composition aligns with a balanced portfolio, aiming to provide growth potential while maintaining some stability through bonds. A typical balanced portfolio might have a more even split between stocks and bonds, suggesting this portfolio leans slightly toward growth. Consider adjusting the asset allocation if you desire a more traditional balance or increased exposure to other asset classes for diversification.

Growth Info

The portfolio's historical performance shows a strong CAGR of 12.4%, indicating robust growth over time. However, it experienced a maximum drawdown of -27.56%, reflecting potential volatility. Compared to benchmarks, this performance suggests a higher risk-reward profile typical of equity-heavy investments. While past performance is not a predictor of future results, it provides insight into how the portfolio might react in different market conditions. To manage potential volatility, consider strategies such as increasing bond allocation or incorporating defensive sectors.

Projection Info

The Monte Carlo simulation projects a range of potential outcomes, with a median return of 305.51% over the investment horizon. This simulation uses historical data to forecast future performance but comes with limitations, as past trends don't guarantee future results. The high probability of positive returns (964 out of 1,000 simulations) suggests a favorable risk-return balance. However, it's crucial to regularly review and adjust the portfolio to adapt to changing market conditions and personal financial goals.

Asset classes Info

  • Stocks
    70%
  • Bonds
    25%
  • Real Estate
    4%

The portfolio is heavily weighted towards stocks, comprising over 70% of the total allocation. Bonds make up around 25%, providing some stability. Real estate accounts for a small portion, adding a layer of diversification. Compared to standard balanced portfolios, which often have a more even stock-bond split, this allocation leans towards growth. While this can enhance returns, it may also increase volatility. To improve diversification, consider adding more real estate or alternative investments, which can offer different risk-return profiles.

Sectors Info

  • Technology
    20%
  • Financials
    12%
  • Industrials
    9%
  • Consumer Discretionary
    8%
  • Health Care
    5%
  • Real Estate
    5%
  • Telecommunications
    4%
  • Energy
    4%
  • Consumer Staples
    3%
  • Basic Materials
    3%
  • Utilities
    1%

The sector allocation reveals a strong emphasis on technology at 19.5%, followed by financial services and industrials. This sector concentration is notable compared to benchmarks, which might have a more balanced distribution. Tech-heavy portfolios can experience higher volatility, particularly during periods of interest rate hikes. Balancing sector exposure can mitigate these risks, providing more stable returns. Consider diversifying into underrepresented sectors like utilities or consumer defensives to enhance stability and reduce potential drawdowns.

Regions Info

  • North America
    63%
  • Europe Developed
    7%
  • Japan
    3%
  • Asia Developed
    1%
  • Australasia
    1%

Geographic exposure is predominantly North American, accounting for over 62% of the portfolio. This concentration aligns with the U.S.-centric nature of the holdings but limits global diversification. Compared to global benchmarks, the portfolio underrepresents regions like Europe and Asia. Expanding geographic exposure can reduce risks associated with regional economic downturns and currency fluctuations. Consider increasing allocations to emerging markets or developed regions outside North America to capture growth opportunities and enhance diversification.

Redundant positions Info

  • Fidelity® MSCI Information Technology Index ETF
    Schwab U.S. Large-Cap Growth ETF
    High correlation

The portfolio contains highly correlated assets, particularly within the technology sector, such as the Fidelity® MSCI Information Technology Index ETF and Schwab U.S. Large-Cap Growth ETF. High correlation can limit diversification benefits, as these assets tend to move together during market fluctuations. To improve risk management, consider reducing overlapping holdings and introducing assets with lower correlation. This adjustment can enhance the portfolio's resilience against market downturns and contribute to a more balanced risk-return profile.

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 could benefit from optimization using the Efficient Frontier, focusing on the best risk-return ratio. Currently, the presence of highly correlated assets suggests room for improvement in diversification. By adjusting allocations among existing assets, you can potentially enhance efficiency. This approach doesn't necessarily involve adding new assets but reallocating within the existing portfolio to achieve a more optimal balance. Regular optimization can help maintain alignment with your risk tolerance and investment objectives.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.60%
  • Vanguard Total Bond Market Index Fund ETF Shares 3.70%
  • Fidelity® MSCI Information Technology Index ETF 0.40%
  • iShares U.S. Treasury Bond ETF 3.20%
  • iShares MBS ETF 3.30%
  • Schwab International Equity ETF 1.00%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Schwab U.S. REIT ETF 3.20%
  • Vanguard S&P 500 ETF 1.20%
  • Invesco S&P MidCap Momentum ETF 0.20%
  • Weighted yield (per year) 1.73%

The portfolio's dividend yield stands at 1.73%, with contributions from various ETFs, including bond funds with higher yields. Dividends provide a steady income stream, which can be reinvested to compound growth. For balanced portfolios, dividends add stability, particularly during market volatility. While the current yield is moderate, focusing on dividend growth strategies could enhance income potential. Consider incorporating high-dividend ETFs or dividend-focused funds to increase yield and provide additional income stability.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Vanguard Total Bond Market Index Fund ETF Shares 0.03%
  • Fidelity® MSCI Information Technology Index ETF 0.08%
  • iShares U.S. Treasury Bond ETF 0.05%
  • iShares MBS ETF 0.04%
  • Schwab International Equity ETF 0.06%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Schwab U.S. REIT ETF 0.07%
  • Vanguard S&P 500 ETF 0.03%
  • Invesco S&P MidCap Momentum ETF 0.34%
  • Weighted costs total (per year) 0.09%

The portfolio's total expense ratio (TER) is a low 0.09%, indicating efficient cost management. This low cost structure supports better long-term returns by minimizing the drag on performance. Compared to industry averages, these costs are impressively low, allowing more of your investment to work for you. Maintaining this cost efficiency is crucial for optimizing returns. Regularly review and compare TERs across your holdings to ensure they remain competitive, and consider replacing any high-fee assets with lower-cost alternatives.

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