A balanced portfolio with strong tech exposure and a focus on US equities

Report created on Dec 27, 2024

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 primarily of ETFs with a significant allocation to US equities, representing 90% of the geographic exposure. The Vanguard Total Stock Market Index Fund ETF Shares makes up half of the portfolio, providing broad market coverage. This composition aligns with a balanced investment strategy, offering exposure to various sectors while maintaining a focus on the US market. However, the inclusion of individual stocks like NVIDIA and Tesla introduces specific company risks. Consider balancing these positions with additional international or sector-specific ETFs to enhance diversification.

Growth Info

The portfolio has demonstrated a strong historical performance, achieving a Compound Annual Growth Rate (CAGR) of 18.13%. This impressive return is accompanied by a maximum drawdown of -28.92%, illustrating the volatility experienced during market downturns. The concentration in tech-heavy assets may contribute to this volatility. While past performance is not indicative of future results, understanding these metrics can help set expectations for potential risks and rewards. To mitigate drawdowns, consider diversifying further into less correlated assets or sectors.

Projection Info

Forward projections using Monte Carlo simulations provide a range of potential outcomes based on historical data. The portfolio's simulations suggest a median growth of 2,043.49%, with most scenarios resulting in positive returns. Monte Carlo analysis uses random sampling to predict future performance, reflecting the portfolio's potential under various market conditions. However, it's essential to remember that these projections are not guarantees. To prepare for variability, regularly review asset allocations and adjust as needed to align with changing market dynamics and personal financial goals.

Asset classes Info

  • Stocks
    99%

The portfolio is heavily weighted towards stocks, with 99.49% of assets in equities. This concentration provides significant growth potential but also increases exposure to market volatility. A balanced portfolio typically includes a mix of asset classes, such as bonds or real estate, to reduce risk. While the current allocation aligns with a growth-focused strategy, introducing fixed-income securities could offer stability and income during market downturns. Assess your risk tolerance and consider incorporating other asset classes to achieve a more balanced risk-return profile.

Sectors Info

  • Technology
    29%
  • Consumer Discretionary
    15%
  • Financials
    13%
  • Health Care
    10%
  • Industrials
    9%
  • Telecommunications
    7%
  • Consumer Staples
    7%
  • Energy
    5%
  • Basic Materials
    2%
  • Real Estate
    2%
  • Utilities
    2%

Technology dominates the sector allocation at 28.91%, reflecting a strong bias towards growth-oriented industries. While this can drive high returns, it also subjects the portfolio to volatility, especially during tech market corrections. The presence of consumer cyclicals and financial services adds some diversification. However, sectors like utilities and real estate are underrepresented, potentially limiting defensive capabilities. Consider rebalancing to include more stable sectors, which could provide a buffer against market fluctuations and enhance long-term stability.

Regions Info

  • North America
    90%
  • Europe Developed
    4%
  • Asia Emerging
    2%
  • Japan
    2%
  • Asia Developed
    1%
  • Australasia
    1%

The portfolio's geographic allocation is predominantly in North America, accounting for 90.21% of exposure. This concentration offers familiarity and stability but may miss out on growth opportunities in emerging markets. A well-diversified portfolio benefits from exposure to various regions, capturing different economic cycles. While the current allocation aligns with a focus on US equities, consider increasing exposure to international markets, particularly emerging economies, to enhance diversification and tap into potential growth areas outside the US.

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 using the Efficient Frontier, which aims to achieve the best possible risk-return ratio with the current assets. The Efficient Frontier helps identify the optimal asset allocation that offers the highest expected return for a given level of risk. While the portfolio is well-composed, consider exploring different allocations to enhance efficiency. This might involve adjusting weights between existing assets or introducing new ones that align with your risk tolerance and investment goals, ensuring the portfolio remains well-balanced.

Dividends Info

  • Invesco NASDAQ 100 ETF 0.40%
  • Schwab U.S. Dividend Equity ETF 3.60%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.30%
  • Weighted yield (per year) 1.69%

The portfolio offers a moderate dividend yield of 1.69%, with contributions from the Schwab U.S. Dividend Equity ETF and Vanguard Total International Stock Index Fund ETF Shares. Dividends provide a steady income stream, which can enhance overall returns, especially in volatile markets. While growth is the primary focus, maintaining a portion of income-generating assets can offer stability and support reinvestment strategies. Regularly review dividend policies and consider increasing exposure to higher-yielding assets if income generation is a priority.

Ongoing product costs Info

  • Invesco NASDAQ 100 ETF 0.15%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.05%

The portfolio's total expense ratio (TER) is impressively low at 0.05%, reflecting cost-effective management. Low fees are crucial for maximizing long-term returns, as they minimize the drag on performance. The use of low-cost ETFs such as those offered by Vanguard and Schwab supports this efficient cost structure. Continue to monitor expense ratios and consider replacing any high-cost holdings with more affordable alternatives. Keeping costs low is a key component of a successful investment strategy, ensuring more of your returns are retained.

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