A highly diversified balanced portfolio with strong dividend focus and significant gold allocation

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.

What type of investor this portfolio is suitable for

Balanced Investors

This portfolio suits an investor with a balanced risk tolerance, seeking steady income and moderate growth. With a medium-term investment horizon, it provides exposure to dividends and gold as a hedge against inflation, appealing to those valuing stability. The diverse geographic and sector allocation aligns with individuals looking for global exposure and reduced market-specific risks. Ideal for investors who prioritize income and risk management while still wanting growth potential.

Positions

  • Vanguard International High Dividend Yield Index Fund ETF Shares
    VYMI - US9219467944
    35.00%
  • SPDR® Gold Shares
    GLD - US78463V1070
    30.00%
  • iShares Core MSCI Emerging Markets ETF
    IEMG - US46434G1031
    20.00%
  • Vanguard S&P 500 ETF
    VOO - US9229083632
    15.00%

This portfolio is composed of four ETFs, with a significant allocation to international high dividend stocks and gold. The largest holding is the Vanguard International High Dividend Yield Index Fund at 35%, followed by SPDR® Gold Shares at 30%. The portfolio also includes the iShares Core MSCI Emerging Markets ETF and Vanguard S&P 500 ETF. Compared to a typical balanced portfolio, this one has a heavier emphasis on international dividends and gold. This composition may appeal to investors seeking income and a hedge against inflation. While the diversification across asset classes is notable, further refinement could enhance risk-adjusted returns.

Growth Info

Historically, this portfolio has achieved a Compound Annual Growth Rate (CAGR) of 10.54%, which indicates robust performance over time. However, it also experienced a maximum drawdown of -26.71%, highlighting periods of significant decline. Comparing this to benchmarks, the returns are competitive but come with notable volatility. Understanding past performance helps set realistic expectations, but it's crucial to remember that past returns don't guarantee future results. To mitigate potential future drawdowns, consider diversifying further into less correlated assets or sectors.

Projection Info

The portfolio's forward projections, based on Monte Carlo simulations, suggest an annualized return of 11.53%. Monte Carlo simulations use historical data to project a range of potential outcomes, helping investors gauge future expectations. While 972 out of 1,000 simulations showed positive returns, it's important to recognize that these projections are not guarantees. The 5th percentile outcome of 21.7% indicates potential downside risk. To improve confidence in future returns, consider adjusting allocations to align better with projected optimal outcomes.

Asset classes Info

  • Stocks
    69%
  • Other
    30%
  • Cash
    0%

This portfolio allocates 69% to stocks and 30% to other assets, primarily gold. Such a distribution is typical for a balanced portfolio, offering growth potential while mitigating risk through gold's stability. Compared to benchmarks, the allocation to gold is higher, providing a hedge against economic downturns. However, this might limit growth during bull markets. To optimize, consider adjusting the balance between asset classes based on market conditions and personal risk tolerance.

Sectors Info

  • Financials
    20%
  • Technology
    10%
  • Consumer Discretionary
    7%
  • Industrials
    6%
  • Telecommunications
    5%
  • Health Care
    5%
  • Energy
    4%
  • Consumer Staples
    4%
  • Basic Materials
    4%
  • Utilities
    3%
  • Real Estate
    1%

Sector allocation shows a notable focus on financial services at 20%, followed by technology at 10%. The remaining sectors are more evenly distributed. This sectoral spread aligns closely with global benchmarks, providing a good diversification base. However, the concentration in financials could expose the portfolio to sector-specific risks, especially during financial downturns. To mitigate this, consider slightly increasing exposure to underrepresented sectors like healthcare or consumer defensive, which may offer stability during economic uncertainties.

Regions Info

  • North America
    18%
  • Europe Developed
    16%
  • Asia Emerging
    14%
  • Asia Developed
    8%
  • Japan
    5%
  • Africa/Middle East
    4%
  • Australasia
    3%
  • Latin America
    2%
  • Europe Emerging
    1%

Geographically, the portfolio is well-diversified with exposure across North America, Europe, and Asia. North America represents 18%, while Europe and Asia combined account for a substantial portion. This global spread aligns well with diversification goals, reducing region-specific risks. However, the 5% allocation in Japan and lower exposure to emerging markets could be adjusted to enhance growth potential. Consider increasing exposure to regions with higher growth prospects, balancing the portfolio's stability and growth.

Market capitalization Info

  • Mega-cap
    34%
  • Unknown
    30%
  • Large-cap
    24%
  • Mid-cap
    10%
  • Small-cap
    1%
  • Micro-cap
    0%

The portfolio's market capitalization distribution leans heavily towards mega-cap companies at 34%, with significant unknown categorization at 30%. This suggests a focus on well-established, stable companies, which can reduce volatility. However, the low allocation to small and micro-cap stocks may limit growth potential. Small caps often offer higher returns, albeit with increased risk. To enhance diversification, consider a modest increase in small-cap exposure, balancing stability with growth opportunities.

Dividends Info

  • iShares Core MSCI Emerging Markets ETF 3.20%
  • Vanguard S&P 500 ETF 1.40%
  • Vanguard International High Dividend Yield Index Fund ETF Shares 4.40%
  • Weighted yield (per year) 2.39%

With a total yield of 2.39%, the portfolio offers a decent income stream, primarily driven by the Vanguard International High Dividend Yield Index Fund. Dividends provide a steady income and can cushion against market volatility. For income-focused investors, this yield is attractive. However, reinvesting dividends can enhance long-term growth. Consider whether the current yield aligns with income needs, and explore additional high-yield opportunities if income is a priority.

Ongoing product costs Info

  • SPDR® Gold Shares 0.40%
  • iShares Core MSCI Emerging Markets ETF 0.09%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard International High Dividend Yield Index Fund ETF Shares 0.22%
  • Weighted costs total (per year) 0.22%

The portfolio's total expense ratio (TER) is 0.22%, which is relatively low and supports better long-term performance. Lower costs mean more returns stay in your pocket, compounding over time. Compared to industry averages, this TER is competitive, indicating efficient cost management. To maintain or improve cost efficiency, regularly review fund fees and consider lower-cost alternatives if they align with your investment strategy.

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.

The current portfolio could be optimized for a higher expected return of 12.68% at the same risk level. This optimization involves reallocating within existing assets to achieve a better risk-return ratio, known as the Efficient Frontier. While this doesn't guarantee higher returns, it suggests potential improvements in allocation. Regularly reviewing the portfolio to align with the Efficient Frontier can enhance long-term performance, balancing risk and reward effectively.

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