A broadly diversified portfolio with balanced risk and efficient cost structure

Report created on Dec 21, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

4/5
Broadly Diversified
Less diversification More diversification

Positions

The portfolio is composed of four ETFs, with a significant emphasis on U.S. equities. The VanEck Morningstar Wide Moat ETF and Vanguard S&P 500 ETF make up 65% of the portfolio, providing strong exposure to established U.S. companies. The Schwab U.S. Dividend Equity ETF adds a focus on dividend-paying stocks, while the Vanguard Total International Stock Index Fund ETF Shares offers international diversification. Compared to typical balanced portfolios, this one leans heavily on U.S. equities, which can be beneficial for growth but may limit global exposure.

Growth Info

Historically, the portfolio has delivered a strong Compound Annual Growth Rate (CAGR) of 12.38%, outperforming many standard benchmarks. However, it experienced a maximum drawdown of -33.5%, indicating vulnerability during market downturns. This performance suggests that while the portfolio is capable of substantial growth, it also carries significant risk during volatile periods. Investors should be prepared for potential fluctuations and consider their risk tolerance accordingly.

Projection Info

The Monte Carlo simulation, which uses historical data to project potential future outcomes, shows a wide range of possible returns. With a median expected return of 321.26%, the portfolio has a high likelihood of positive returns, as 985 out of 1,000 simulations were positive. However, it's important to note that past performance doesn't guarantee future results, and the portfolio could still face significant volatility. This projection suggests a promising outlook, but investors should remain cautious.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio's asset allocation is predominantly in stocks, accounting for over 99% of the total holdings. This heavy stock weighting aligns with a growth-focused strategy, which can lead to higher returns but also increases exposure to market volatility. Compared to balanced benchmarks, this portfolio has less diversification in asset classes, which could be a consideration for investors seeking stability through bonds or other asset types.

Sectors Info

  • Technology
    20%
  • Health Care
    15%
  • Financials
    14%
  • Industrials
    14%
  • Consumer Staples
    10%
  • Consumer Discretionary
    9%
  • Telecommunications
    6%
  • Energy
    4%
  • Basic Materials
    4%
  • Utilities
    1%
  • Real Estate
    1%

Sector allocation is well-distributed, with notable exposure to technology, healthcare, and financial services. These sectors collectively represent nearly 50% of the portfolio, aligning closely with common market benchmarks. However, the portfolio's significant technology weighting could result in higher volatility, especially during periods of economic uncertainty or interest rate changes. Investors might consider adjusting sector weights to maintain a balanced risk profile.

Regions Info

  • North America
    86%
  • Europe Developed
    6%
  • Asia Emerging
    2%
  • Japan
    2%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is heavily concentrated in North America, which constitutes 85.5% of the holdings. While this reflects a strong focus on the U.S. market, it limits exposure to international growth opportunities. Compared to global benchmarks, this portfolio underrepresents regions like Europe and Asia. Diversifying geographically could help mitigate regional risks and capture growth in emerging markets.

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 appears to be on the Efficient Frontier, suggesting an optimal balance between risk and return given the current assets. This means that, based on historical data, it's unlikely that a better risk-return ratio could be achieved without altering the asset mix significantly. However, investors should regularly review their portfolio to ensure it remains aligned with their evolving risk tolerance and investment objectives.

Dividends Info

  • Schwab U.S. Dividend Equity ETF 3.70%
  • Vanguard S&P 500 ETF 0.90%
  • Vanguard Total International Stock Index Fund ETF Shares 1.60%
  • Weighted yield (per year) 1.25%

The portfolio's dividend yield is 1.25%, primarily driven by the Schwab U.S. Dividend Equity ETF, which yields 3.7%. This yield is modest but provides a steady income stream, appealing to investors who value regular cash flow. While dividends contribute to total returns, they are less significant in a growth-oriented portfolio. Investors should assess whether the dividend yield aligns with their income needs and investment goals.

Ongoing product costs Info

  • VanEck Morningstar Wide Moat ETF 0.47%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.20%

The portfolio's total expense ratio (TER) is 0.2%, which is impressively low. This cost efficiency supports better long-term performance by minimizing the drag on returns. Compared to industry averages, this portfolio is cost-effective, allowing more capital to remain invested and compound over time. Keeping costs low is crucial for maximizing net returns, making this portfolio well-aligned with best practices in cost management.

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