A balanced portfolio with a strong focus on U.S. equities and technology exposure

Report created on Jan 20, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

1/5
Single-Focused
Less diversification More diversification

Positions

The portfolio is evenly spread across eight positions, each holding 12.5% of the total. It includes a mix of ETFs and a single fund, with a predominant focus on U.S. equities and technology. Compared to a benchmark balanced portfolio, this one has a higher equity exposure and less geographic diversification. This setup suggests a tilt towards growth-oriented investments, which can be beneficial during bullish market phases. However, it may increase vulnerability to market downturns. Consider diversifying further across different asset classes and regions to mitigate potential risks.

Growth Info

Historically, the portfolio has delivered a solid Compound Annual Growth Rate (CAGR) of 12.85%, with a maximum drawdown of -21.16%. This performance indicates resilience and the ability to recover from market downturns. Compared to typical balanced portfolios, the return is quite impressive, though the drawdown reflects moderate risk. While past performance is not indicative of future results, understanding these metrics can help set realistic expectations. To maintain robust performance, consider regular reviews to ensure alignment with market conditions and personal financial goals.

Projection Info

Monte Carlo simulations, which use historical data to project potential future outcomes, suggest a promising outlook. With 1,000 simulations, the portfolio shows a median return of 410.2% and an annualized return of 13.75%. Nearly all simulations resulted in positive returns, indicating a high likelihood of future growth. However, it's important to note that these projections are not guarantees. They can be influenced by market volatility and changing economic conditions. Regularly revisiting your investment strategy can help stay on track with your goals.

Asset classes Info

  • Stocks
    75%
  • Bonds
    12%

The portfolio is heavily weighted towards stocks at 75%, with bonds making up 12%. This allocation aligns with a growth-focused strategy, offering potential for higher returns but also increased volatility. Compared to benchmark norms for balanced portfolios, the stock allocation is on the higher side. This could be advantageous in a rising market but might expose the portfolio to greater risks during downturns. Consider adjusting the balance between stocks and bonds to better match your risk tolerance and investment horizon.

Sectors Info

  • Technology
    29%
  • Financials
    9%
  • Consumer Discretionary
    8%
  • Industrials
    6%
  • Health Care
    6%
  • Telecommunications
    5%
  • Energy
    4%
  • Consumer Staples
    4%
  • Basic Materials
    2%
  • Utilities
    1%
  • Real Estate
    1%

Sector allocation reveals a strong emphasis on technology at 29%, followed by financial services and consumer cyclicals. This concentration in tech can drive growth but also introduce volatility, especially during periods of regulatory changes or rate hikes. Compared to common benchmarks, the portfolio is more tech-heavy. While this aligns with current market trends, diversifying into other sectors can provide a buffer against sector-specific downturns. Evaluate whether this sector mix aligns with your long-term investment strategy.

Regions Info

  • North America
    74%

The portfolio's geographic exposure is concentrated in North America at 74%, with minimal exposure to other regions. This focus can capitalize on U.S. market strength but limits global diversification benefits. Compared to typical benchmarks, there is a noticeable underexposure to international markets. Diversifying geographically can help mitigate risks associated with regional economic downturns or political instability. Consider increasing exposure to developed and emerging markets to enhance diversification and potentially capture growth opportunities abroad.

Market capitalization Info

  • Mega-cap
    24%
  • Large-cap
    24%
  • Mid-cap
    11%
  • Small-cap
    9%
  • Micro-cap
    6%

The portfolio's market capitalization is distributed across mega, big, medium, small, and micro caps. Mega and big caps dominate, offering stability and established growth potential. Small and micro caps provide opportunities for higher returns but come with increased volatility. This distribution supports a well-rounded approach, balancing stability with growth potential. However, the lower allocation to small and micro caps could limit upside potential. Adjusting the market cap balance might enhance overall returns while managing risk.

Redundant positions Info

  • Invesco NASDAQ 100 ETF
    Vanguard Information Technology Index Fund ETF Shares
    High correlation
  • Vanguard Total Stock Market Index Fund ETF Shares
    Vanguard S&P 500 ETF
    High correlation

Asset correlation analysis indicates high correlation between certain ETFs, such as Invesco NASDAQ 100 and Vanguard Information Technology. This implies that these assets tend to move together, limiting diversification benefits. During market downturns, highly correlated assets may exacerbate losses. Reducing correlation by diversifying into less correlated assets can enhance risk management. Consider replacing or rebalancing these positions to improve diversification and potentially enhance the portfolio's resilience.

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 be optimized using the Efficient Frontier, which identifies the best possible risk-return ratio. Currently, the portfolio has overlapping assets that may not maximize diversification benefits. By rebalancing and removing highly correlated assets, you can potentially achieve a more efficient portfolio. This optimization aims to improve returns without increasing risk, aligning with your balanced risk tolerance. Consider working with a financial advisor to explore optimization strategies and enhance your portfolio's efficiency.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.60%
  • Vanguard Total Bond Market Index Fund ETF Shares 3.70%
  • Invesco NASDAQ 100 ETF 0.60%
  • Schwab U.S. Dividend Equity ETF 3.60%
  • BlackRock Liquidity Funds - Treasury Trust Fund 4.70%
  • Vanguard Information Technology Index Fund ETF Shares 0.60%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Weighted yield (per year) 2.16%

The portfolio's average dividend yield stands at 2.16%, with notable contributions from the Schwab U.S. Dividend Equity ETF and BlackRock Liquidity Funds. Dividends can provide a steady income stream, adding stability to portfolio returns. For investors seeking income alongside growth, this yield is a positive feature. However, the focus on growth-oriented assets may limit overall yield potential. Assess whether the current dividend yield aligns with your income needs and consider increasing exposure to higher-yielding assets if necessary.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Vanguard Total Bond Market Index Fund ETF Shares 0.03%
  • Invesco NASDAQ 100 ETF 0.15%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Vanguard Information Technology Index Fund ETF Shares 0.10%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.08%

The portfolio's total expense ratio (TER) is 0.08%, which is impressively low and supports better long-term performance. Low costs contribute to higher net returns, allowing more of your investment to grow over time. Compared to industry averages, this cost structure is highly efficient. Maintaining low costs is a significant advantage, and continuing to focus on cost-effective investments can further enhance portfolio performance. Regularly review expense ratios to ensure they remain competitive and aligned with your investment strategy.

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