A balanced and highly diversified portfolio with a strong focus on North American equities

Report created on Dec 20, 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 well-diversified, consisting of a mix of equity and bond funds. With 77.7% in stocks and 15% in bonds, it aligns closely with a balanced investment strategy. This composition is typical for investors seeking moderate growth with some income stability. A notable feature is the significant allocation to large-cap index funds, which can provide stability and growth. However, the low allocation to cash and money markets suggests limited liquidity. Consider adjusting the cash position if immediate liquidity needs arise.

Growth Info

Historically, the portfolio has delivered a Compound Annual Growth Rate (CAGR) of 7.05%, which is solid for a balanced portfolio. However, it also experienced a maximum drawdown of -29.86%, indicating vulnerability during market downturns. This performance is in line with typical market cycles, where equities drive growth but also increase volatility. To mitigate potential losses, consider adding more defensive assets or increasing bond allocations. Remember, past performance doesn't guarantee future results.

Projection Info

Forward projections using Monte Carlo simulations suggest an annualized return of 6.21%. This method uses historical data to simulate thousands of potential future outcomes. While 83.3% of simulations show positive returns, the 5th percentile projects a loss of -38.27%. These projections highlight the uncertainty inherent in investing. To increase confidence in future returns, periodically review and adjust the asset allocation, ensuring it remains aligned with your risk tolerance and investment goals.

Asset classes Info

  • Stocks
    78%
  • Bonds
    15%
  • Other
    1%

The portfolio's asset class distribution leans heavily towards equities, which make up nearly 78% of the total. Bonds account for about 15%, providing some income and stability. This allocation is typical for balanced portfolios, offering growth potential with moderate risk. However, the lack of alternative assets like real estate or commodities could limit diversification benefits. Consider adding these asset classes to enhance diversification and potentially reduce overall portfolio risk.

Sectors Info

  • Technology
    18%
  • Financials
    12%
  • Industrials
    10%
  • Health Care
    9%
  • Consumer Discretionary
    8%
  • Real Estate
    6%
  • Telecommunications
    5%
  • Basic Materials
    5%
  • Consumer Staples
    5%
  • Energy
    4%
  • Utilities
    2%

The sector allocation shows a significant concentration in technology (18%) and financial services (12%). While these sectors often drive growth, they can also be volatile, especially during economic shifts. A balanced sector allocation aligns well with benchmarks, but consider monitoring sector trends. For instance, tech-heavy portfolios may face challenges during periods of rising interest rates. Adjusting sector weights to include more defensive sectors like utilities or consumer staples can provide stability.

Regions Info

  • North America
    54%
  • Europe Developed
    15%
  • No data
    11%
  • Japan
    5%
  • Asia Developed
    3%
  • Asia Emerging
    3%
  • Australasia
    1%
  • Latin America
    1%

Geographically, the portfolio is heavily weighted towards North America, comprising 54% of the total. This concentration exposes the portfolio to region-specific risks but also benefits from the stability and growth potential of developed markets. The 15% allocation to developed Europe adds diversification, though emerging markets are underrepresented. To enhance global diversification, consider increasing exposure to emerging markets, which can offer growth opportunities and reduce regional risk concentration.

Redundant positions Info

  • JOHN HANCOCK DISCIPLINED VALUE FUND CLASS R6
    COLUMBIA MID CAP VALUE FUND COLUMBIA MID CAP VALUE FUND CLASS R5
    High correlation

The portfolio contains highly correlated assets, particularly between the John Hancock Disciplined Value Fund and the Columbia Mid Cap Value Fund. High correlation means these assets tend to move together, potentially limiting diversification benefits. In market downturns, this could increase overall portfolio risk. Consider replacing one of these funds with a less correlated asset to improve diversification. This change could enhance risk management and optimize the portfolio's performance.

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 can potentially be optimized using the Efficient Frontier, which identifies the best risk-return balance. By adjusting the current asset weights, you could achieve a more efficient portfolio. This approach focuses on maximizing returns for a given level of risk. However, optimization doesn't account for personal investment goals or liquidity needs. Regularly review and rebalance the portfolio to maintain alignment with your financial objectives and risk tolerance.

Dividends Info

  • COLUMBIA SMALL CAP VALUE FUND II COLUMBIA SMALL CAP VALUE FUND II CLASS R5 0.70%
  • COHEN & STEERS REALTY SHARES COHEN & STEERS REALTY SHARES 2.10%
  • COLUMBIA MID CAP VALUE FUND COLUMBIA MID CAP VALUE FUND CLASS R5 0.90%
  • METROPOLITAN WEST TOTAL RETURN BOND FUND PLAN CLASS 3.30%
  • T. ROWE PRICE GROWTH STOCK FUND INC. T. ROWE PRICE GROWTH STOCK FUND INC. 6.60%
  • T. Rowe Price High Yield Fd In 6.00%
  • EUROPACIFIC GROWTH FUND CLASS R-6 0.50%
  • VANGUARD EXTENDED MARKET INDEX FUND INSTITUTIONAL SHARES 0.80%
  • VANGUARD INSTITUTIONAL INDEX FUND INSTITUTIONAL PLUS SHARES 1.30%
  • Vanguard Federal Money Market Fund Investor Shares 4.80%
  • VANGUARD DEVELOPED MARKETS INDEX FUND INSTITUTIONAL SHARES 1.80%
  • Weighted yield (per year) 1.93%

The portfolio's total dividend yield is 1.93%, with notable contributions from funds like the T. Rowe Price Growth Stock Fund (6.6%) and the Metropolitan West Total Return Bond Fund (3.3%). Dividends can provide a steady income stream, which is beneficial for income-focused investors. However, the overall yield is modest, reflecting the growth-oriented nature of the portfolio. If income is a priority, consider increasing allocations to high-yield funds or dividend-focused equities.

Ongoing product costs Info

  • COLUMBIA SMALL CAP VALUE FUND II COLUMBIA SMALL CAP VALUE FUND II CLASS R5 0.81%
  • COHEN & STEERS REALTY SHARES COHEN & STEERS REALTY SHARES 0.88%
  • COLUMBIA MID CAP VALUE FUND COLUMBIA MID CAP VALUE FUND CLASS R5 0.82%
  • VOYA MIDCAP OPPORTUNITIES FUND CLASS R6 0.83%
  • JOHN HANCOCK DISCIPLINED VALUE FUND CLASS R6 0.62%
  • METROPOLITAN WEST TOTAL RETURN BOND FUND PLAN CLASS 0.37%
  • NATIONWIDE GENEVA SMALL CAP GROWTH FUND CLASS R6 0.83%
  • Oppenheimer Developing Markets Y 1.01%
  • T. ROWE PRICE GROWTH STOCK FUND INC. T. ROWE PRICE GROWTH STOCK FUND INC. 0.65%
  • T. Rowe Price High Yield Fd In 0.70%
  • EUROPACIFIC GROWTH FUND CLASS R-6 0.47%
  • VANGUARD EXTENDED MARKET INDEX FUND INSTITUTIONAL SHARES 0.05%
  • VANGUARD INSTITUTIONAL INDEX FUND INSTITUTIONAL PLUS SHARES 0.02%
  • VANGUARD DEVELOPED MARKETS INDEX FUND INSTITUTIONAL SHARES 0.06%
  • Weighted costs total (per year) 0.30%

The portfolio's total expense ratio (TER) is 0.3%, which is relatively low and supports long-term performance. Low costs are crucial as they directly impact net returns. However, some funds, like the Oppenheimer Developing Markets Fund, have higher fees (1.01%). Consider evaluating if lower-cost alternatives can replace these higher-fee funds without sacrificing performance. Reducing costs where possible can enhance net returns over time, aligning with best investment practices.

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