A balanced portfolio with strong growth potential and high concentration in US equities

Report created on Jan 11, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

1/5
Single-Focused
Less diversification More diversification

Positions

This portfolio is heavily weighted towards US equities, with 50% in the Vanguard S&P 500 ETF, 25% in the JPMorgan Nasdaq Equity Premium Income ETF, and another 25% in the Schwab U.S. Dividend Equity ETF. This allocation leans towards a growth-focused strategy, capitalizing on large-cap US companies. Compared to common benchmarks, this portfolio lacks diversification across asset classes, being heavily equity-focused. While this can lead to higher returns in bullish markets, it may also expose the portfolio to greater volatility. Consider introducing other asset classes like bonds or international equities to enhance diversification and reduce risk.

Growth Info

The historical performance of this portfolio is impressive, with a Compound Annual Growth Rate (CAGR) of 12.55%. This indicates strong growth over time, outperforming many common benchmarks. However, it also experienced a maximum drawdown of -15.67%, which reflects the potential for significant losses during market downturns. While past performance is a useful indicator, it’s important to remember that it doesn’t guarantee future results. To mitigate potential downturns, consider exploring more defensive investments or strategies that can provide stability during volatile periods.

Projection Info

The Monte Carlo simulation, which uses historical data to project future outcomes, suggests a wide range of potential returns. The median (50th percentile) indicates a potential growth of 355.34%, while the 5th percentile shows a more conservative 76.77% return. This underscores the inherent uncertainty in market projections and highlights the importance of maintaining a diversified and risk-managed portfolio. While simulations provide valuable insights, they are not foolproof forecasts. Regularly reviewing and adjusting your portfolio based on changing market conditions can help align it with your financial goals.

Asset classes Info

  • Stocks
    96%
  • No data
    4%

The portfolio is predominantly invested in stocks, comprising 95.85% of the total allocation. This high concentration in equities suggests a focus on capital appreciation, which can result in significant gains during market upswings. However, this also exposes the portfolio to potential volatility. By diversifying into other asset classes such as fixed income or real assets, investors can mitigate risk and enhance stability. A more balanced allocation could provide a buffer against market fluctuations, ensuring a smoother ride towards achieving long-term financial objectives.

Sectors Info

  • Technology
    32%
  • Consumer Discretionary
    12%
  • Financials
    12%
  • Health Care
    11%
  • Telecommunications
    10%
  • Industrials
    7%
  • Consumer Staples
    7%
  • Energy
    5%
  • Utilities
    2%
  • Basic Materials
    2%
  • Real Estate
    1%

Sector allocation is notably concentrated, with a significant 31.68% in technology, followed by consumer cyclicals and financial services. This concentration in tech can lead to higher volatility, especially during interest rate hikes or tech sector downturns. While tech has been a strong performer, diversifying into other sectors can provide stability and reduce sector-specific risks. Consider increasing exposure to defensive sectors like healthcare or consumer staples, which tend to perform better during economic downturns, to balance out the portfolio’s sectoral risks.

Regions Info

  • North America
    99%
  • Europe Developed
    1%

The portfolio is overwhelmingly focused on North America, with 98.97% of its allocation in the region. This concentration limits exposure to international markets, which can offer diversification benefits and growth opportunities. By investing in developed and emerging markets outside North America, investors can tap into different economic cycles and reduce region-specific risks. Consider gradually increasing international exposure to create a more globally diversified portfolio, which can enhance long-term growth potential and reduce overall volatility.

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 current asset allocation could potentially be optimized using the Efficient Frontier, which seeks the best possible risk-return ratio. This optimization involves adjusting the weights of existing assets to achieve a more efficient portfolio without necessarily adding new investments. By exploring different allocation scenarios, you can find a balance that maximizes returns for a given level of risk. While this may not always lead to diversification, it can enhance the portfolio’s performance by ensuring each asset contributes optimally to the overall risk-return profile.

Dividends Info

  • JPMorgan Nasdaq Equity Premium Income ETF 9.70%
  • Schwab U.S. Dividend Equity ETF 3.70%
  • Vanguard S&P 500 ETF 1.30%
  • Weighted yield (per year) 4.00%

The portfolio boasts a solid overall dividend yield of 4.0%, largely driven by the JPMorgan Nasdaq Equity Premium Income ETF’s 9.7% yield. Dividends provide a steady income stream, which can be particularly beneficial for income-focused investors or those seeking to reinvest dividends for compounding growth. While dividends contribute to total returns, it's crucial to balance income generation with growth potential. Maintaining a mix of high-yield and growth-oriented investments can ensure the portfolio meets both income and capital appreciation goals.

Ongoing product costs Info

  • JPMorgan Nasdaq Equity Premium Income ETF 0.35%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.12%

The portfolio's total expense ratio (TER) stands at 0.12%, which is impressively low and supports better long-term performance by minimizing costs. Lower fees mean more of your returns stay in your pocket, enhancing compounding over time. This cost efficiency aligns well with best practices in portfolio management. However, always be vigilant about any hidden fees or costs that may arise. Regularly reviewing and comparing the costs of your investments can ensure you continue to benefit from competitive expense ratios.

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