A balanced portfolio with a tech focus and strong historical performance but high volatility

Report created on Jan 8, 2025

Risk profile Info

4/7
Balanced
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Diversification profile Info

3/5
Moderately Diversified
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Positions

The portfolio is heavily weighted towards ETFs, with a significant 38% allocation to the Vanguard Information Technology Index Fund ETF. This tech-heavy focus suggests a growth-oriented strategy, but it may expose the portfolio to sector-specific risks. A more diversified asset allocation could mitigate these risks. With 78% in stocks, 13% in real estate, and 8% in bonds, it leans towards equities, typical for a balanced risk profile. Consider increasing bond exposure for more stability.

Growth Info

Historically, the portfolio has delivered a strong Compound Annual Growth Rate (CAGR) of 14.16%, indicating impressive past performance. However, it also experienced a maximum drawdown of -31.4%, reflecting significant volatility. While past performance is not indicative of future results, understanding these trends can help set realistic expectations. Balancing high growth potential with risk management is crucial for sustaining long-term performance.

Projection Info

The Monte Carlo simulation, which uses historical data to model potential future outcomes, suggests a median return of 193% with a broad range of possibilities. While 90% of simulations forecast positive returns, it's important to remember that these projections are not guarantees. The simulation highlights the portfolio's potential but also underscores the inherent uncertainty in investing. Regularly reassessing the portfolio to align with changing market conditions can optimize outcomes.

Asset classes Info

  • Stocks
    78%
  • Real Estate
    13%
  • Bonds
    8%

The portfolio's asset class distribution is heavily skewed towards stocks, accounting for over 78% of the allocation. This concentration may limit diversification benefits, especially during market downturns. Real estate and bonds provide some balance, but increasing exposure to other asset classes like bonds or alternative investments could enhance stability. Comparing this allocation to benchmarks can guide adjustments that improve diversification and risk management.

Sectors Info

  • Technology
    47%
  • Real Estate
    13%
  • Financials
    7%
  • Consumer Discretionary
    5%
  • Utilities
    5%
  • Telecommunications
    5%
  • Industrials
    5%
  • Health Care
    4%
  • Consumer Staples
    4%
  • Energy
    3%
  • Basic Materials
    1%

Technology dominates the portfolio's sector allocation, comprising 47% of the total. While this sector has driven growth, it also introduces higher volatility, particularly during interest rate changes. Other sectors like real estate and financial services offer diversification, but their smaller allocations may not fully offset tech risks. Consider evaluating sector weights to ensure a balanced approach that aligns with long-term investment goals.

Regions Info

  • North America
    91%
  • Europe Developed
    5%
  • Japan
    2%
  • Asia Emerging
    1%
  • Asia Developed
    1%
  • Australasia
    1%

The portfolio's geographic allocation is heavily concentrated in North America, making up over 91% of the total. This focus limits exposure to global markets and potential growth opportunities. Diversifying geographically can reduce regional risks and enhance potential returns. Comparing the current geographic distribution to global benchmarks can help identify underrepresented areas that may benefit from increased exposure.

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.

Efficient Frontier analysis suggests that the portfolio could be optimized for a better risk-return ratio. By adjusting the current asset allocation, it's possible to achieve a more efficient balance between risk and return. This optimization focuses solely on existing assets and their allocations, not on diversification. Regularly reassessing the portfolio's efficiency can ensure alignment with investment objectives and risk tolerance.

Dividends Info

  • iShares Core Moderate Allocation ETF 1.90%
  • FIDELITY INTERNATIONAL INDEX FUND INSTITUTIONAL PREMIUM CLASS 0.40%
  • Schwab U.S. Dividend Equity ETF 3.60%
  • Invesco S&P 500® Low Volatility ETF 1.60%
  • Vanguard Information Technology Index Fund ETF Shares 0.60%
  • Vanguard Real Estate Index Fund ETF Shares 3.90%
  • Vanguard Utilities Index Fund ETF Shares 3.00%
  • Xerox Corp 8.50%
  • Weighted yield (per year) 1.71%

The portfolio's dividend yield of 1.71% is relatively modest, with notable contributions from the Schwab U.S. Dividend Equity ETF and Vanguard Real Estate Index Fund ETF. Dividends can provide a steady income stream, especially during volatile market periods. For income-focused investors, increasing exposure to high-yield assets might be beneficial. Balancing growth and income-generating investments can enhance overall returns.

Ongoing product costs Info

  • iShares Core Moderate Allocation ETF 0.15%
  • First Trust Dow Jones Internet Index Fund 0.52%
  • FIDELITY INTERNATIONAL INDEX FUND INSTITUTIONAL PREMIUM CLASS 0.04%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Invesco S&P 500® Low Volatility ETF 0.25%
  • Vanguard Information Technology Index Fund ETF Shares 0.10%
  • Vanguard Real Estate Index Fund ETF Shares 0.12%
  • Vanguard Utilities Index Fund ETF Shares 0.10%
  • Weighted costs total (per year) 0.15%

With a total expense ratio (TER) of 0.15%, the portfolio's costs are impressively low. This efficient cost structure supports better long-term performance by minimizing the impact of fees. Regularly reviewing and optimizing costs can further enhance returns. Consider evaluating whether lower-cost alternatives could replace higher-fee assets without compromising on investment quality or goals.

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