Balanced Portfolio with Strong U.S. Focus and Moderate Risk Offering High Dividend Yield Potential

Report created on Dec 5, 2024

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 primarily composed of U.S. ETFs, with a heavy emphasis on stocks. It includes four major positions: Vanguard S&P 500 ETF, iShares Russell 2000 ETF, JPMorgan Nasdaq Equity Premium Income ETF, and Schwab U.S. Dividend Equity ETF. This portfolio leans heavily towards equities, which typically offer higher growth potential but also come with increased volatility. The allocation suggests a focus on large-cap and small-cap U.S. stocks, with a tilt towards dividend income. A more diversified approach could be considered to balance the risk and potential returns further.

Growth Info

Historically, this portfolio has performed well, with a compound annual growth rate (CAGR) of 13.95%. The maximum drawdown of -15.94% indicates a moderate level of risk, showing resilience in volatile markets. The fact that 90% of returns were made up in just 12 days highlights the importance of staying invested to capture significant market movements. This performance suggests a strong historical trend, but past performance isn't always indicative of future results. Continuing to monitor market conditions and adjusting the portfolio as needed could help maintain this positive trajectory.

Projection Info

Using a Monte Carlo simulation, which models potential future outcomes based on historical data, the portfolio shows promising projections. With 1,000 simulations, the annualized return across all scenarios is 14.53%. The 5th percentile projects an 89.6% return, while the median 50th percentile projects a 475.59% increase, and the 67th percentile suggests a 656.73% return. Nearly all simulations predict positive returns, indicating a robust potential for growth. However, it's essential to remember that these are hypothetical outcomes and actual performance can vary. Regularly reviewing and adjusting the portfolio can help align it with changing market conditions.

Asset classes Info

  • Stocks
    96%
  • No data
    3%

The portfolio is heavily weighted towards stocks, making up over 96% of the allocation. This focus on equities suggests a strategy aimed at capital growth, which can be beneficial over the long term. However, it also increases exposure to market volatility. Including other asset classes like bonds or alternative investments could provide a buffer against market downturns and reduce overall portfolio risk. Balancing asset classes based on risk tolerance and investment goals can lead to a more resilient portfolio that can weather various market conditions.

Sectors Info

  • Technology
    28%
  • Financials
    13%
  • Health Care
    12%
  • Consumer Discretionary
    11%
  • Industrials
    10%
  • Telecommunications
    8%
  • Consumer Staples
    7%
  • Energy
    5%
  • Real Estate
    2%
  • Basic Materials
    2%
  • Utilities
    2%

Sector allocation is diverse, with a significant portion in technology, financial services, and healthcare. This diversification across sectors helps mitigate the risk associated with any single industry downturn. However, the technology sector's dominance at 28% could lead to increased volatility, given its historical market swings. Balancing sector exposure can help stabilize returns and provide a more predictable performance. Considering a more even distribution across sectors could enhance the portfolio's resilience and provide opportunities for growth in various economic conditions.

Regions Info

  • North America
    99%
  • Europe Developed
    1%

Geographically, the portfolio is heavily concentrated in North America, with nearly 99% of assets allocated there. This concentration reflects a strong belief in the U.S. market's potential but also exposes the portfolio to regional risks. Incorporating more international exposure could diversify geopolitical and economic risks, potentially smoothing returns. Diversifying across different regions can capture growth opportunities in emerging markets and developed economies outside of North America. A more globally balanced portfolio can reduce reliance on the U.S. market and enhance long-term stability.

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 can be optimized by adjusting along the efficient frontier, which balances risk and return. Moving towards a riskier portfolio could involve increasing equity exposure or focusing on higher growth sectors. Conversely, a more conservative approach might include adding fixed-income assets or diversifying geographically. Before optimizing, consider addressing other areas such as sector and geographic diversification to reduce concentration risks. Achieving an optimal balance that aligns with risk tolerance and financial goals can enhance the portfolio's long-term resilience and performance.

Dividends Info

  • iShares Russell 2000 ETF 1.10%
  • JPMorgan Nasdaq Equity Premium Income ETF 9.40%
  • Schwab U.S. Dividend Equity ETF 3.40%
  • Vanguard S&P 500 ETF 1.20%
  • Weighted yield (per year) 3.30%

The portfolio offers a respectable dividend yield of 3.3%, with a notable contribution from the JPMorgan Nasdaq Equity Premium Income ETF at 9.4%. Dividends can provide a steady income stream, which is especially valuable during periods of market volatility. This yield enhances the portfolio's total return and can be reinvested for compounding growth. To maintain or increase dividend income, consider monitoring dividend policies and payout ratios of the holdings. Ensuring a balance between high yield and growth potential can optimize income while preserving capital.

Ongoing product costs Info

  • iShares Russell 2000 ETF 0.19%
  • JPMorgan Nasdaq Equity Premium Income ETF 0.35%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.14%

The portfolio's total expense ratio (TER) is relatively low at 0.14%, with Vanguard S&P 500 ETF having the lowest cost at 0.03%. Keeping investment costs low is crucial for maximizing net returns over time. While the current cost structure is favorable, it's essential to remain vigilant about any changes in expense ratios or additional fees. Regularly reviewing the cost-effectiveness of each holding ensures that the portfolio remains efficient. Maintaining a focus on low-cost investments can significantly enhance long-term performance by preserving more of the portfolio's returns.

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