A balanced portfolio with strong U.S. focus and reasonable emerging market exposure
Report created on Feb 17, 2025Risk profile
4/7
Diversification profile
4/5
Positions
-
IV iShares Core S&P 500 ETF
IVV - US4642872000 34.00% -
SC Schwab U.S. Dividend Equity ETF
SCHD - US8085247976 33.00% -
VW Vanguard FTSE Emerging Markets Index Fund ETF Shares
VWO - US9220428588 33.00%
The portfolio is evenly distributed across three ETFs, with the iShares Core S&P 500 ETF holding the largest share at 34%. This composition provides a solid foundation in U.S. equities, complemented by the Schwab U.S. Dividend Equity ETF and Vanguard FTSE Emerging Markets Index Fund ETF Shares, each at 33%. Compared to a typical balanced benchmark, this portfolio leans heavily on U.S. equities, which may benefit from domestic market stability. Consider reviewing the allocation to ensure it aligns with long-term goals, especially in terms of geographic diversification.
Growth
The portfolio has demonstrated a solid historic performance with a CAGR of 10.61%. This indicates a strong growth trajectory over time, although it experienced a significant max drawdown of -33.08%. When compared to benchmarks, the portfolio's performance aligns well with broad market indices, suggesting effective asset allocation. However, past performance is not a guarantee of future results. Regularly reviewing performance data can help you stay informed about potential risks and opportunities.
Projection
Using Monte Carlo simulation, the portfolio's future potential was assessed with 1,000 simulations. The median outcome projects a 282.6% increase, with a 5th percentile outcome of 15.0% and a 67th percentile at 434.1%. This method uses historical data to simulate various market conditions, providing a range of possible outcomes. While the projections are encouraging, they are based on past data and should be interpreted cautiously. Regular updates to the simulation can help refine expectations as market conditions evolve.
Asset classes
- Stocks 99%
- Cash 1%
The portfolio is heavily weighted in stocks at 99%, with a minimal 1% in cash. This allocation suggests a focus on growth, which is typical for balanced portfolios. However, it may expose the portfolio to higher volatility during market downturns. Compared to benchmarks, the allocation is aggressive. Consider incorporating more asset classes, like bonds, to enhance diversification and potentially reduce risk.
Sectors
- Technology 22%
- Financials 18%
- Consumer Discretionary 11%
- Health Care 11%
- Industrials 9%
- Consumer Staples 8%
- Telecommunications 8%
- Energy 7%
- Basic Materials 3%
- Utilities 2%
- Real Estate 2%
The portfolio has notable exposure to the Technology sector at 22%, followed by Financial Services at 18%. This sectoral allocation reflects a balanced approach across key industries, aligning well with common benchmarks. However, the heavy tech weighting could lead to higher volatility, especially during periods of interest rate changes. Monitoring sector trends and adjusting allocations accordingly can help manage risks and capitalize on growth opportunities.
Regions
- North America 67%
- Asia Emerging 19%
- Asia Developed 7%
- Africa/Middle East 4%
- Latin America 2%
- Europe Developed 1%
- Europe Emerging 1%
The geographic allocation shows a strong focus on North America at 67%, with emerging markets representing 19%. This provides a mix of stability and growth potential, although it underrepresents Europe and other developed regions. Compared to global benchmarks, the portfolio is U.S.-centric. Consider diversifying further into other regions to mitigate country-specific risks and capture opportunities in underrepresented markets.
Market capitalization
- Large-cap 41%
- Mega-cap 33%
- Mid-cap 22%
- Small-cap 3%
- Micro-cap 1%
The portfolio is primarily invested in large-cap stocks, with 41% in big caps and 33% in mega caps. This focus provides stability and lower volatility, typical of established companies. However, the small and micro-cap exposure is minimal, which may limit growth opportunities. Compared to benchmarks, this allocation is conservative. Exploring increased exposure to smaller market caps could enhance growth potential, albeit with increased risk.
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 could potentially be optimized further using the Efficient Frontier, which seeks the best possible risk-return ratio based on current assets. This optimization focuses on reallocating existing assets to achieve a more efficient balance between risk and return. While the current allocation is well-aligned, exploring optimization can help enhance performance without significantly altering the portfolio's core structure.
Dividends
- iShares Core S&P 500 ETF 1.20%
- Schwab U.S. Dividend Equity ETF 3.60%
- Vanguard FTSE Emerging Markets Index Fund ETF Shares 3.10%
- Weighted yield (per year) 2.62%
The portfolio's total dividend yield is 2.62%, with the Schwab U.S. Dividend Equity ETF providing the highest yield at 3.60%. Dividends contribute to steady income, which can be appealing for those seeking regular cash flow. Compared to other balanced portfolios, the yield is competitive. Ensure that dividend reinvestment aligns with your financial goals, as it can significantly impact long-term growth.
Ongoing product costs
- iShares Core S&P 500 ETF 0.03%
- Schwab U.S. Dividend Equity ETF 0.06%
- Vanguard FTSE Emerging Markets Index Fund ETF Shares 0.08%
- Weighted costs total (per year) 0.06%
The portfolio's total expense ratio (TER) is impressively low at 0.06%, which supports better long-term performance by minimizing costs. This aligns well with best practices for cost-efficient investing. Compared to industry standards, the costs are commendable. Continue monitoring expense ratios and consider low-cost alternatives if any changes occur, to maintain cost efficiency.
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