A balanced portfolio with strong US focus and tech-heavy sector exposure

Report created on Jan 13, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

The portfolio is heavily weighted towards equities, with 99.84% in stocks and a small cash allocation. It includes three ETFs: Vanguard Total Stock Market Index Fund (65%), Invesco NASDAQ 100 (20%), and Avantis U.S. Small Cap Value (15%). This composition is typical for a balanced portfolio, aiming for growth while maintaining some diversification. However, the lack of bonds or alternative assets might increase volatility. Consider adding fixed-income or alternative investments to enhance diversification and reduce risk.

Growth Info

Historically, the portfolio has performed well, with a Compound Annual Growth Rate (CAGR) of 15.53%. This suggests strong growth over the years, outperforming many benchmarks. However, the maximum drawdown of -25.4% indicates exposure to significant market downturns. While past performance is encouraging, it does not guarantee future success. Regularly reviewing performance against benchmarks can help ensure the portfolio remains aligned with investment goals.

Projection Info

Using Monte Carlo simulations, which analyze potential future outcomes based on historical data, the portfolio shows promising forward projections. With an annualized return of 18.17% across simulations, the median outcome suggests substantial growth. However, these projections are based on historical trends and market conditions, which may not repeat. Regularly reassess projections as new data becomes available to ensure expectations align with market realities.

Asset classes Info

  • Stocks
    100%

The portfolio's asset class allocation is predominantly in stocks, with minimal cash exposure. This concentration in equities can drive growth but also increases risk during market downturns. Compared to typical balanced benchmarks, which include bonds, this allocation may lack stability. Introducing fixed-income securities could provide a buffer against volatility, offering more consistent returns across market cycles.

Sectors Info

  • Technology
    31%
  • Financials
    13%
  • Consumer Discretionary
    12%
  • Industrials
    9%
  • Telecommunications
    9%
  • Health Care
    9%
  • Consumer Staples
    5%
  • Energy
    5%
  • Basic Materials
    3%
  • Real Estate
    2%
  • Utilities
    2%

The sector allocation is notably tech-heavy, with 31.15% in technology. Other significant sectors include financial services and consumer cyclicals. This concentration can lead to high volatility, especially when interest rates rise or tech faces challenges. While tech has driven recent market gains, consider diversifying into sectors like utilities or healthcare to reduce dependency on tech performance and stabilize returns.

Regions Info

  • North America
    99%
  • Europe Developed
    1%

Geographically, the portfolio is overwhelmingly focused on North America, with 98.94% exposure. This lack of international diversification could expose the portfolio to regional economic risks. Compared to global benchmarks, this is a significant over-exposure to one region. Diversifying into developed and emerging markets can enhance growth potential and provide a hedge against US-specific economic downturns.

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 benefit from optimization using the Efficient Frontier, which helps identify the best risk-return ratio based on current assets. By adjusting the allocation between existing funds, it's possible to achieve a more efficient portfolio. This doesn't mean adding new assets but rather reallocating within the current selection to enhance performance while maintaining risk levels.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.60%
  • Invesco NASDAQ 100 ETF 0.60%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Weighted yield (per year) 1.20%

With a total yield of 1.2%, the portfolio offers moderate income from dividends. The Vanguard Total Stock Market Index Fund contributes the most to this yield. For investors seeking income, this yield might be considered low. Exploring higher-yielding investments, such as dividend-focused ETFs or bonds, could enhance income generation while maintaining growth potential.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • Invesco NASDAQ 100 ETF 0.15%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Weighted costs total (per year) 0.09%

The portfolio's Total Expense Ratio (TER) of 0.09% is impressively low, indicating cost efficiency. Lower costs can significantly boost long-term returns by minimizing fees that erode gains. This cost-effectiveness aligns well with best practices for maximizing investment returns. Continue monitoring fund expenses to ensure they remain competitive and consider reallocating to lower-cost alternatives if necessary.

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