Balanced portfolio with a strong focus on growth and value across diverse market caps

Report created on May 3, 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 is strategically diversified across several asset classes, with a dominant focus on stocks (87%) and a modest allocation to real estate (5%) and cash (8%). The stock allocation is spread across growth, value, mid-cap, and small-cap ETFs, highlighting a balanced approach to capturing market dynamics. The inclusion of a commodity ETF and a short-duration treasury bond ETF adds layers of diversification outside traditional stock and bond markets. Compared to a typical balanced portfolio, this one leans more towards equities, suggesting a slightly higher risk appetite but with the potential for greater returns.

Growth Info

Historically, this portfolio has delivered a Compound Annual Growth Rate (CAGR) of 14.28%, with a maximum drawdown of -24.12%. These figures suggest that the portfolio has experienced significant growth, albeit with periods of notable volatility. The days contributing to 90% of returns being concentrated in just 21 days indicate that much of the portfolio’s performance can be attributed to short, significant rallies. When compared to a benchmark balanced portfolio, these returns might be higher, reflecting the portfolio's heavier allocation to equities and its successful selection of asset classes.

Projection Info

Monte Carlo simulations, which project future performance by analyzing historical data, show a wide range of outcomes for this portfolio. The median projection suggests a potential 338.8% growth, with a 67th percentile outcome even higher. However, it's important to remember that these simulations are based on past data and cannot predict future market conditions accurately. They provide a spectrum of possible outcomes rather than a precise forecast, emphasizing the uncertainty inherent in investing.

Asset classes Info

  • Stocks
    87%
  • Cash
    8%
  • Real Estate
    5%

The portfolio's allocation across asset classes is well-considered, with a heavy tilt towards equities for growth, complemented by real estate for income and diversification, and cash for liquidity and safety. This mix supports a balanced risk-return profile, suitable for investors with a moderate risk tolerance. The relatively low allocation to bonds and other fixed-income securities reflects a preference for growth over income, aligning with the portfolio's overall strategy.

Sectors Info

  • Technology
    26%
  • Financials
    12%
  • Consumer Discretionary
    10%
  • Industrials
    9%
  • Health Care
    8%
  • Real Estate
    8%
  • Telecommunications
    7%
  • Consumer Staples
    4%
  • Energy
    3%
  • Utilities
    3%
  • Basic Materials
    2%

With significant allocations to technology, financial services, and consumer cyclicals, the portfolio is positioned to benefit from growth in these dynamic sectors. However, this concentration also exposes it to sector-specific risks, such as regulatory changes or economic downturns affecting consumer spending. Diversifying further into underrepresented sectors could mitigate these risks while potentially capturing growth in other areas of the economy.

Regions Info

  • North America
    87%
  • Asia Emerging
    3%
  • Asia Developed
    1%
  • Africa/Middle East
    1%

The portfolio's geographic allocation is heavily weighted towards North America (87%), with minimal exposure to emerging and developed markets outside of this region. This concentration in a single geography can limit diversification benefits and expose the portfolio to regional economic and political risks. Increasing exposure to other regions, especially emerging markets, could offer additional growth opportunities and risk mitigation through geographic diversification.

Market capitalization Info

  • Mega-cap
    31%
  • Mid-cap
    30%
  • Large-cap
    22%
  • Small-cap
    7%
  • Micro-cap
    1%

The balanced exposure across mega, medium, big, and small-cap stocks suggests a strategic approach to capturing growth across the market cap spectrum. This diversification can help mitigate the risks associated with size-specific economic cycles, as smaller companies may outperform in certain market conditions, while larger companies provide stability. However, the relatively low allocation to micro-caps indicates a cautious approach to the most volatile segment of the market.

Redundant positions Info

  • Vanguard Mid-Cap Growth Index Fund ETF Shares
    Vanguard Small-Cap Growth Index Fund ETF Shares
    High correlation
  • Vanguard Value Index Fund ETF Shares
    Vanguard Mid-Cap Value Index Fund ETF Shares
    Vanguard Small-Cap Value Index Fund ETF Shares
    High correlation

The portfolio contains highly correlated assets within the growth and value categories, particularly among mid-cap and small-cap ETFs. This redundancy limits the portfolio's diversification benefits, as these assets tend to move in tandem during market fluctuations. Reducing overlap by consolidating similar assets or reallocating to underrepresented sectors or regions could enhance diversification and potentially improve risk-adjusted returns.

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's current allocation suggests room for optimization, particularly by addressing the overlap in highly correlated assets. By reallocating funds from redundant positions into underrepresented sectors or regions, the portfolio could achieve a more efficient risk-return profile. This optimization process, guided by the principles of the Efficient Frontier, aims to maximize returns for a given level of risk, enhancing the portfolio's overall performance potential.

Dividends Info

  • iShares GSCI Commodity Dynamic Roll Strategy ETF 5.10%
  • iShares® 0-3 Month Treasury Bond ETF 4.40%
  • Vanguard Small-Cap Growth Index Fund ETF Shares 0.60%
  • Vanguard Small-Cap Value Index Fund ETF Shares 1.00%
  • Vanguard Real Estate Index Fund ETF Shares 4.00%
  • Vanguard Mid-Cap Value Index Fund ETF Shares 2.40%
  • Vanguard S&P 500 ETF 1.40%
  • Vanguard Mid-Cap Growth Index Fund ETF Shares 0.70%
  • Vanguard Value Index Fund ETF Shares 2.30%
  • Vanguard Growth Index Fund ETF Shares 0.50%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 3.10%
  • Weighted yield (per year) 1.71%

The portfolio's total dividend yield stands at 1.71%, which is modest but in line with the growth-oriented strategy. Higher-yielding assets like the commodity ETF and real estate ETF contribute significantly to this yield, providing a source of income alongside capital appreciation. For investors seeking more income, reallocating towards higher-yielding stocks or ETFs could increase the portfolio's overall yield without drastically altering its risk profile.

Ongoing product costs Info

  • iShares GSCI Commodity Dynamic Roll Strategy ETF 0.48%
  • iShares® 0-3 Month Treasury Bond ETF 0.07%
  • Vanguard Small-Cap Growth Index Fund ETF Shares 0.07%
  • Vanguard Small-Cap Value Index Fund ETF Shares 0.07%
  • Vanguard Real Estate Index Fund ETF Shares 0.12%
  • Vanguard Mid-Cap Value Index Fund ETF Shares 0.07%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Mid-Cap Growth Index Fund ETF Shares 0.07%
  • 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%
  • Weighted costs total (per year) 0.07%

With a Total Expense Ratio (TER) averaging 0.07%, the portfolio benefits from low-cost ETFs, which enhances net returns over the long term. This cost efficiency is crucial in maximizing investment growth, as higher costs can significantly erode returns. The portfolio's focus on low-cost Vanguard and iShares ETFs demonstrates a strategic approach to cost management, aligning with best practices for long-term investing.

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