This portfolio is a balanced risk profile with low diversification and high exposure to the US market through an S&P 500 ETF

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 suitable for an investor with a balanced risk tolerance, seeking growth through exposure to U.S. equities. Such investors are typically comfortable with market volatility and have a long-term investment horizon. Their primary goal is capital appreciation, with a secondary focus on income through dividends. This investor is less concerned with short-term fluctuations and more focused on building wealth over time. They value cost-effectiveness and are willing to accept some level of risk for the potential of higher returns, aligning with a growth-oriented investment strategy.

Positions

  • Vanguard S&P 500 ETF
    VOO - US9229083632
    100.00%

The portfolio is entirely composed of the Vanguard S&P 500 ETF, focusing solely on equities. This choice reflects a concentrated bet on large-cap U.S. stocks, offering exposure to a wide range of sectors within the U.S. economy. While the ETF is a popular choice for broad market exposure, it lacks diversification across other asset classes like bonds or international equities. To improve diversification, consider integrating other asset classes or geographic regions. This would help in managing risk and potentially enhancing returns through exposure to different market dynamics.

Growth Info

Historically, the portfolio has demonstrated strong performance with a compound annual growth rate (CAGR) of 13.99%. This reflects the long-term growth potential of U.S. equities, particularly given the robust performance of the S&P 500 index over the years. However, the portfolio also experienced a maximum drawdown of -34.03%, indicating significant volatility during market downturns. This underscores the need for a risk management strategy to mitigate potential losses. To enhance stability, consider balancing the portfolio with less volatile assets that can provide a cushion during market fluctuations.

Projection Info

A Monte Carlo simulation, which uses random sampling to predict future outcomes, projects a wide range of potential portfolio values. With a hypothetical initial investment, the 5th percentile outcome is a modest 102.14% increase, while the 50th percentile shows a 532.89% increase, and the 67th percentile a 728.7% increase. The high number of simulations with positive returns (998 out of 1,000) suggests a favorable outlook. However, the variability in potential outcomes highlights the importance of considering one's risk tolerance and investment horizon when planning for the future.

Asset classes Info

  • Stocks
    100%
  • Cash
    0%

The portfolio is heavily weighted towards stocks, with a negligible cash allocation. This high equity exposure aligns with a growth-oriented strategy, capitalizing on the long-term appreciation potential of equities. However, the lack of fixed-income assets or alternative investments can increase volatility and risk. Incorporating bonds or other asset classes could provide diversification benefits, reducing overall portfolio risk and offering more stable returns. A balanced mix of asset classes could enhance the portfolio's risk-adjusted performance, aligning with a more conservative or moderate investment strategy.

Sectors Info

  • Technology
    33%
  • Financials
    13%
  • Health Care
    11%
  • Consumer Discretionary
    10%
  • Telecommunications
    9%
  • Industrials
    8%
  • Consumer Staples
    6%
  • Energy
    3%
  • Utilities
    3%
  • Real Estate
    2%
  • Basic Materials
    2%

The sector allocation within the portfolio is diverse, with significant exposure to technology, financial services, and healthcare. This reflects the market composition of the S&P 500, which is heavily weighted towards these sectors. While this provides exposure to key drivers of economic growth, it also concentrates risk in these areas. To mitigate sector-specific risks, consider diversifying across additional sectors or industries. This can help protect against downturns in any single sector and provide opportunities for growth in less correlated areas of the market.

Regions Info

  • North America
    99%
  • Europe Developed
    1%
  • Asia Developed
    0%

Geographically, the portfolio is overwhelmingly concentrated in North America, primarily the United States. This focus leverages the strong historical performance of U.S. markets but limits exposure to international opportunities. With only minimal allocations to Europe and Asia, the portfolio misses out on potential growth from emerging markets and other regions. To capitalize on global market trends and reduce geographic risk, consider diversifying into international equities. This can provide a hedge against U.S. market volatility and tap into diverse economic cycles and growth opportunities abroad.

Dividends Info

  • Vanguard S&P 500 ETF 1.20%
  • Weighted yield (per year) 1.20%

The portfolio offers a dividend yield of 1.2%, which provides a modest income stream in addition to potential capital appreciation. This yield is typical for an ETF tracking the S&P 500, reflecting the dividends paid by the underlying companies. While dividend income can enhance total returns, it may not be sufficient for investors seeking higher income. To increase dividend income, consider adding high-dividend stocks or dividend-focused ETFs. Balancing growth and income-generating assets can create a more comprehensive strategy that aligns with both income and growth objectives.

Ongoing product costs Info

  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.03%

The portfolio benefits from very low costs, with a total expense ratio (TER) of just 0.03%. This is a significant advantage, as lower fees mean more of the portfolio's returns are retained by the investor. The Vanguard S&P 500 ETF is known for its cost-effectiveness, making it an attractive choice for cost-conscious investors. Keeping investment costs low is crucial for maximizing long-term returns. To maintain this advantage, consider sticking with low-cost funds and avoiding high-fee investment products that could erode returns over time.

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