Balanced Yet Single-Focused Portfolio with High Tech and Healthcare Exposure

Report created on Jun 7, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

1/5
Single-Focused
Less diversification More diversification

Positions

The portfolio is composed primarily of ETFs with a significant concentration in the Vanguard S&P 500 ETF, making up nearly half of the allocation. This shows a strong preference for broad market exposure but also indicates a lack of diversification. While ETFs provide a diversified exposure within themselves, the overall portfolio leans heavily towards large-cap U.S. equities. To improve diversification, consider adding more varied asset classes or sectors to reduce dependency on the U.S. market and large-cap equities.

Growth Info

Historically, the portfolio has performed well with a compound annual growth rate (CAGR) of 16.81%. However, it has also experienced a maximum drawdown of -22.91%, indicating significant volatility. This performance suggests that while the portfolio has the potential for high returns, it also comes with considerable risk. To mitigate this, consider balancing high-growth assets with more stable, income-generating investments to smooth out returns and reduce volatility.

Projection Info

A Monte Carlo simulation, using a hypothetical initial investment, shows a wide range of potential outcomes. With 1,000 simulations, the median (50th percentile) projection is a portfolio value of 804.91%, and the 5th percentile projection is 53.55%. This indicates a high probability of positive returns but also highlights the potential for significant variability. To better align with your risk tolerance, consider adjusting the asset allocation to include more conservative investments, which could help narrow the range of potential outcomes.

Asset classes Info

  • Stocks
    93%
  • Cash
    7%

The portfolio is heavily weighted towards stocks, making up over 92% of the allocation, with minimal exposure to bonds and cash. This imbalance suggests a high-risk tolerance but also a vulnerability to market downturns. Including a higher proportion of bonds or other fixed-income assets could provide a buffer against stock market volatility and offer more stable returns. This would make the portfolio more resilient in various market conditions.

Sectors Info

  • Technology
    22%
  • Financials
    14%
  • Health Care
    14%
  • Telecommunications
    12%
  • Consumer Discretionary
    8%
  • Industrials
    7%
  • Consumer Staples
    4%
  • Real Estate
    3%
  • Energy
    3%
  • Basic Materials
    2%
  • Utilities
    2%

The sector allocation shows a strong emphasis on Technology, Financial Services, and Healthcare, which together make up over 50% of the portfolio. While these sectors have strong growth potential, this concentration also increases sector-specific risks. To mitigate this, consider diversifying into other sectors like Consumer Defensive or Utilities, which can offer more stability and reduce the impact of sector-specific downturns.

Regions Info

  • North America
    88%
  • Asia Emerging
    1%
  • Europe Developed
    1%
  • Japan
    1%
  • Asia Developed
    1%

Geographically, the portfolio is overwhelmingly focused on North America, with over 88% of assets allocated there. This lack of international exposure can limit growth opportunities and increase vulnerability to regional economic downturns. Adding more international equities, particularly from emerging markets, can provide diversification benefits and enhance the portfolio's growth potential. This geographical diversification can also reduce the impact of U.S.-centric risks.

Dividends Info

  • Franklin FTSE China ETF 3.10%
  • Alphabet Inc Class C 0.30%
  • iShares Currency Hedged MSCI Japan ETF 2.00%
  • Meta Platforms Inc. 0.20%
  • Microsoft Corporation 0.70%
  • iShares® 0-3 Month Treasury Bond ETF 5.20%
  • UnitedHealth Group Incorporated 1.00%
  • Vanguard Small-Cap Value Index Fund ETF Shares 2.10%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 3.30%
  • Vanguard Real Estate Index Fund ETF Shares 3.70%
  • Vanguard Mid-Cap Index Fund ETF Shares 1.50%
  • Vanguard S&P 500 ETF 1.30%
  • Vanguard Value Index Fund ETF Shares 2.30%
  • Vanguard Growth Index Fund ETF Shares 0.50%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 3.20%
  • Energy Select Sector SPDR® Fund 3.50%
  • Weighted yield (per year) 1.55%

The portfolio includes several dividend-paying stocks and ETFs, which can provide a steady income stream. However, the overall dividend yield is not specified, making it difficult to assess the income potential. Dividends can be a valuable component of total returns, especially in volatile markets. To enhance income generation, consider increasing the allocation to high-dividend stocks or dividend-focused ETFs. This can provide regular cash flow and reduce reliance on capital gains for returns.

Ongoing product costs Info

  • Franklin FTSE China ETF 0.19%
  • iShares Currency Hedged MSCI Japan ETF 0.50%
  • iShares® 0-3 Month Treasury Bond ETF 0.07%
  • Vanguard Small-Cap Value Index Fund ETF Shares 0.07%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 0.05%
  • Vanguard Real Estate Index Fund ETF Shares 0.12%
  • Vanguard Mid-Cap Index Fund ETF Shares 0.04%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Value Index Fund ETF Shares 0.04%
  • Vanguard Growth Index Fund ETF Shares 0.04%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 0.08%
  • Energy Select Sector SPDR® Fund 0.09%
  • Weighted costs total (per year) 0.03%

The portfolio has low overall costs, with an average expense ratio of 0.03%, which is excellent for maintaining net returns. Low costs are crucial for long-term investment success as they minimize the drag on returns. However, even small cost differences can add up over time. Regularly review the expense ratios of your holdings and consider switching to lower-cost alternatives if available. This cost-conscious approach can enhance overall portfolio performance.

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