A balanced portfolio with strong U.S. focus and high dividend yield potential

Report created on Jan 24, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio is composed entirely of equities, with a notable 25% each in the Schwab U.S. Dividend Equity ETF and Vanguard S&P 500 ETF. The remaining 50% is distributed among three other ETFs. This structure indicates a focus on dividend income and broad market exposure. Compared to a typical balanced portfolio, which might include bonds, this one is more aggressive. For better risk management, consider introducing some fixed-income assets, which can stabilize returns during market volatility.

Growth Info

Historically, the portfolio has performed well, achieving a Compound Annual Growth Rate (CAGR) of 13.49%. This impressive growth suggests effective asset selection and market timing. However, the maximum drawdown of -31.17% highlights potential volatility. When compared to common benchmarks, this performance aligns well with U.S. equity market trends. To mitigate future drawdowns, consider diversifying further or introducing defensive assets.

Projection Info

The Monte Carlo simulation, which uses historical data to predict future outcomes, suggests a wide range of possible returns. With 1,000 simulations, the median projected return is 427.1%, indicating potential for substantial growth. However, remember that these projections rely on past data and might not reflect future market conditions. To prepare for variability, consider stress-testing the portfolio under different economic scenarios.

Asset classes Info

  • Stocks
    100%

The portfolio is entirely allocated to stocks, lacking diversification across asset classes like bonds or real estate. This concentration increases potential returns but also elevates risk. Compared to a typical balanced portfolio, this one is more volatile. To enhance stability, consider incorporating fixed-income securities, which can provide a cushion during equity market downturns.

Sectors Info

  • Technology
    27%
  • Health Care
    14%
  • Consumer Discretionary
    13%
  • Industrials
    13%
  • Financials
    11%
  • Telecommunications
    7%
  • Consumer Staples
    6%
  • Energy
    5%
  • Basic Materials
    2%
  • Utilities
    2%
  • Real Estate
    1%

The portfolio is heavily weighted towards technology (27%), followed by healthcare (14%) and consumer cyclicals (13%). This sector concentration aligns with growth-oriented strategies but may increase vulnerability to sector-specific risks, such as regulatory changes or technological disruptions. To balance exposure, consider diversifying into sectors like utilities or real estate, which often perform differently in various economic cycles.

Regions Info

  • North America
    84%
  • Europe Developed
    12%
  • Japan
    3%
  • Australasia
    1%

With 84% of the portfolio allocated to North America, there's a strong home bias, which is common among U.S. investors. The remaining 16% is spread across developed Europe and Japan. This geographic concentration could limit exposure to growth opportunities in emerging markets. Consider increasing international diversification to reduce risk and capture growth in other regions.

Market capitalization Info

  • Large-cap
    42%
  • Mega-cap
    27%
  • Mid-cap
    22%
  • Small-cap
    7%
  • Micro-cap
    2%

The portfolio primarily focuses on large-cap stocks, with 69% in big and mega-cap companies. This allocation offers stability and lower volatility compared to small-cap stocks. However, small and micro-cap stocks, which make up only 9% of the portfolio, can provide higher growth potential. To enhance growth opportunities, consider increasing exposure to smaller-cap stocks.

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 can be optimized using the Efficient Frontier, a concept that helps identify the best possible risk-return ratio. By adjusting the allocation among current assets, you can potentially enhance returns without increasing risk. Remember, optimization is based on historical data, so it might not perfectly predict future performance. Regularly reviewing and adjusting allocations can help maintain efficiency.

Dividends Info

  • WisdomTree International Hedged Quality Dividend Growth Fund 1.40%
  • Global X NASDAQ 100 Covered Call ETF 11.30%
  • Schwab U.S. Dividend Equity ETF 3.50%
  • Vanguard S&P 500 ETF 1.20%
  • Weighted yield (per year) 3.08%

The portfolio's total dividend yield is 3.08%, with the Global X NASDAQ 100 Covered Call ETF offering an impressive 11.30%. Dividends provide a steady income stream, which can be particularly valuable during market downturns. For investors prioritizing income, maintaining or increasing exposure to high-yield assets can enhance cash flow, though it's important to balance yield with growth potential.

Ongoing product costs Info

  • AdvisorShares Focused Equity ETF 0.84%
  • WisdomTree International Hedged Quality Dividend Growth Fund 0.58%
  • Global X NASDAQ 100 Covered Call ETF 0.61%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.37%

The portfolio's total expense ratio (TER) is 0.37%, with the Vanguard S&P 500 ETF being the most cost-effective at 0.03%. Low costs are crucial for maximizing long-term returns, as they compound over time. The portfolio's overall cost efficiency is commendable, but keep an eye on higher-cost ETFs like the AdvisorShares Focused Equity ETF, which could erode returns if not carefully monitored.

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