A balanced and highly diversified portfolio with a focus on momentum and international dividends

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

What type of investor this portfolio is suitable for

Balanced Investors

This portfolio is well-suited for an investor with a balanced risk tolerance, seeking growth while being mindful of market volatility. The strategic mix of growth-oriented and defensive assets, combined with the geographical and sectoral diversification, aligns with the goals of someone looking to build wealth over a medium to long-term horizon. This investor likely appreciates the blend of stability and growth potential, comfortable with some market fluctuations but keen on protecting against significant downturns. The emphasis on low-cost ETFs and diversified income sources further suggests a savvy investor focused on efficient, sustainable wealth accumulation.

Positions

  • Invesco S&P 500® Momentum ETF
    SPMO - US46138E3392
    30.00%
  • American Century ETF Trust
    AVGV - US0250722164
    20.00%
  • First Trust NASDAQ® Clean Edge® Smart Grid Infrastructure Index Fund
    GRID - US33737A1088
    20.00%
  • Janus Detroit Street Trust - Janus Henderson AAA CLO ETF
    JAAA - US47103U8457
    15.00%
  • Vanguard International High Dividend Yield Index Fund ETF Shares
    VYMI - US9219467944
    15.00%

This portfolio exhibits a strategic composition, allocating 85% to stocks and 15% to bonds, with a notable absence of cash or alternative investments. The emphasis on ETFs, particularly in sectors like Industrials, Financial Services, and Technology, suggests a blend of growth and defensive strategies. The diversification across ten sectors, with significant allocations to Industrials, Financial Services, and Technology, indicates a well-thought-out approach to balancing risk and return. Comparing this to a typical balanced portfolio, the sectoral distribution aligns with a strategy aimed at capturing market momentum while seeking stability through bonds and high-dividend international stocks.

Growth Info

Historically, the portfolio has demonstrated impressive growth with a Compound Annual Growth Rate (CAGR) of 21.64% and a maximum drawdown of -15.14%. These figures suggest a resilient portfolio during market fluctuations, with the days contributing 90% of returns being notably concentrated. While past performance is a useful indicator, it's essential to remember that it does not guarantee future results. However, the historical robustness, especially with such a concentrated period of significant returns, underscores the effectiveness of the chosen asset allocation and sector diversification in navigating market cycles.

Projection Info

Monte Carlo simulations, which project future performance based on historical data, show a wide range of outcomes but consistently positive returns across 1,000 simulations. The key percentiles indicate potential high growth, with the median outcome suggesting a 1,311.2% increase. While these projections are encouraging, it's crucial to understand the limitations of relying solely on historical data for future predictions. Market conditions, economic factors, and unforeseen events can significantly impact actual returns. Thus, while the simulations offer optimism, maintaining a balanced view and readiness for volatility is advisable.

Asset classes Info

  • Stocks
    85%
  • Bonds
    15%
  • Cash
    0%
  • Other
    0%
  • No data
    0%

The allocation to 85% stocks and 15% bonds is a classic balanced portfolio structure, aiming for growth while cushioning against market volatility. This mix supports a medium to long-term investment horizon, where the equity component drives growth and the bond allocation offers stability during market downturns. The absence of cash or alternatives could be seen as a missed opportunity for further diversification or liquidity. However, the current mix aligns well with a balanced risk profile, aiming for substantial growth while managing downside risk.

Sectors Info

  • Industrials
    20%
  • Financials
    16%
  • Technology
    16%
  • Consumer Discretionary
    7%
  • Utilities
    7%
  • Telecommunications
    6%
  • Consumer Staples
    4%
  • Energy
    4%
  • Basic Materials
    3%
  • Health Care
    2%
  • Real Estate
    1%

The portfolio's sectoral allocation reveals a strategic emphasis on Industrials, Financial Services, and Technology, with these sectors comprising over half of the stock allocation. This concentration may increase exposure to sector-specific risks but also positions the portfolio to benefit from growth trends in these areas. The diversification into Utilities, Communication Services, and Consumer Defensive sectors adds a layer of defensive positioning, potentially mitigating volatility. Balancing growth-oriented and defensive sectors is a prudent strategy, though ongoing monitoring is essential to adjust to changing market dynamics.

Regions Info

  • North America
    53%
  • Europe Developed
    19%
  • Japan
    4%
  • Asia Developed
    3%
  • Asia Emerging
    3%
  • Australasia
    2%
  • Latin America
    1%
  • Africa/Middle East
    1%
  • Europe Emerging
    0%

Geographically, the portfolio is primarily focused on North America and Europe, with modest exposure to developed and emerging markets in Asia, Australasia, and Latin America. This distribution reflects a cautious approach to international diversification, leveraging the stability of developed markets while capturing growth opportunities in select emerging markets. While the heavy reliance on North American assets is consistent with the investor's region, expanding into more diverse international markets could enhance global exposure and potentially reduce geographical risk.

Market capitalization Info

  • Mega-cap
    31%
  • Large-cap
    29%
  • Mid-cap
    18%
  • Small-cap
    5%
  • Micro-cap
    2%

The exposure across market capitalizations, with a significant emphasis on mega and big-cap stocks, underscores a preference for established, large-scale companies likely to offer stability and consistent returns. The allocation to medium, small, and micro-cap stocks, although smaller, introduces growth potential and diversification benefits. This blend of market caps is well-suited to a balanced portfolio, combining the safety of large caps with the growth prospects of smaller companies. Regularly reassessing this mix is crucial to maintaining an optimal balance between risk and reward.

Dividends Info

  • American Century ETF Trust 2.00%
  • First Trust NASDAQ® Clean Edge® Smart Grid Infrastructure Index Fund 1.00%
  • Janus Detroit Street Trust - Janus Henderson AAA CLO ETF 5.50%
  • Invesco S&P 500® Momentum ETF 0.60%
  • Vanguard International High Dividend Yield Index Fund ETF Shares 3.80%
  • Weighted yield (per year) 2.18%

The dividend yields across the ETFs contribute to the portfolio's total yield of 2.18%, offering a steady income stream alongside capital appreciation. The high dividend yield from the Janus Henderson AAA CLO ETF is particularly noteworthy, suggesting a strategic choice to boost income. While dividends are an attractive feature, especially in a balanced portfolio, it's vital to balance yield-seeking with growth and stability considerations. Regularly reviewing dividend-paying assets for sustainability and growth prospects is recommended to ensure they continue to meet the portfolio's objectives.

Ongoing product costs Info

  • American Century ETF Trust 0.26%
  • First Trust NASDAQ® Clean Edge® Smart Grid Infrastructure Index Fund 0.57%
  • Janus Detroit Street Trust - Janus Henderson AAA CLO ETF 0.21%
  • Invesco S&P 500® Momentum ETF 0.13%
  • Vanguard International High Dividend Yield Index Fund ETF Shares 0.22%
  • Weighted costs total (per year) 0.27%

The portfolio's total expense ratio (TER) of 0.27% is impressively low, particularly given the diversification and specialized ETFs included. Keeping costs low is crucial for enhancing long-term returns, as even small differences in fees can have a significant impact over time. The careful selection of cost-effective ETFs demonstrates a strategic approach to maximizing net returns. Investors should continue monitoring fees and consider cost in any future portfolio adjustments or when adding new positions.

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.

The analysis suggests that the portfolio could achieve a more efficient risk-return balance, with a potential optimization leading to an expected return of 7.10% at a similar risk level. This indicates room for improvement in aligning the portfolio closer to the Efficient Frontier, where the risk-return ratio is optimized. While the current performance is strong, exploring adjustments to asset allocation or diversification could enhance efficiency. Regularly evaluating the portfolio against the Efficient Frontier can help identify opportunities for incremental improvements in risk management and return potential.

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