A well-diversified balanced portfolio with a strong focus on large-cap U.S. equities

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 suits an investor seeking balanced growth with moderate risk tolerance and a medium to long-term investment horizon. It prioritizes capital appreciation through equity exposure while maintaining some income stability from bonds. The focus on large-cap U.S. stocks offers reliability, while international diversification provides additional growth opportunities. This approach is ideal for individuals looking to build wealth over time without taking on excessive risk. Investors should be comfortable with some market volatility and be willing to adjust allocations as financial goals and market conditions evolve.

Positions

  • iShares Core S&P 500 ETF
    IVV - US4642872000
    40.00%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares
    VEA - US9219438580
    19.00%
  • Vanguard Total Bond Market Index Fund ETF Shares
    BND - US9219378356
    11.00%
  • Invesco S&P 500® Quality ETF
    SPHQ - US46137V2410
    7.00%
  • Invesco S&P 500® Momentum ETF
    SPMO - US46138E3392
    7.00%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares
    VWO - US9220428588
    6.00%
  • Schwab U.S. Large-Cap Growth ETF
    SCHG - US8085243009
    5.00%
  • Vanguard Small-Cap Index Fund ETF Shares
    VB - US9229087518
    5.00%

The portfolio is heavily weighted towards equities, with 88% in stocks and 11% in bonds. This allocation aligns with a balanced investment strategy, offering growth potential while maintaining some stability through bonds. The iShares Core S&P 500 ETF makes up 40% of the portfolio, providing broad exposure to large-cap U.S. stocks. This is complemented by international equities and a bond fund to enhance diversification. This composition is well-suited for investors seeking moderate risk and long-term growth potential. However, the portfolio could benefit from a more varied bond allocation to further mitigate risks.

Growth Info

Historically, the portfolio has shown a strong CAGR of 13.50%, indicating robust growth over time. This performance outpaces many benchmarks, reflecting the strength of its equity-heavy allocation. However, the maximum drawdown of -31.07% highlights the potential for significant short-term volatility. This is a common characteristic of portfolios with substantial equity exposure. Despite the drawdown, the portfolio's ability to recover and sustain growth makes it appealing for investors comfortable with moderate risk. Investors should be aware that past performance does not guarantee future results, and market conditions can change.

Projection Info

The Monte Carlo simulation, which uses historical data to project future outcomes, suggests a favorable outlook for the portfolio. With a median projected return of 414.8% and a positive return in 985 out of 1,000 simulations, the portfolio seems well-positioned for future growth. However, it's important to note that simulations are based on historical trends and assumptions, which may not hold true in the future. Investors should use these projections as a guide but remain flexible to adapt to changing market conditions. Regular reviews and adjustments can help maintain alignment with investment goals.

Asset classes Info

  • Stocks
    88%
  • Bonds
    11%
  • Cash
    1%
  • Other
    0%
  • No data
    0%

The portfolio's allocation across asset classes is predominantly in stocks, with a minor allocation to bonds. This skew towards equities is typical for a growth-oriented strategy, providing potential for higher returns. The bond portion offers some stability and income, balancing the risk of equity volatility. Compared to benchmark norms, this allocation is slightly aggressive, favoring growth over income. Investors might consider increasing bond exposure to enhance stability, especially if nearing retirement or seeking to reduce volatility. This adjustment could help better align with a balanced risk profile.

Sectors Info

  • Technology
    22%
  • Financials
    15%
  • Consumer Discretionary
    10%
  • Industrials
    10%
  • Health Care
    9%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Energy
    3%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    2%

The sector allocation is well-diversified, with a notable 22% in technology, followed by financial services and consumer cyclicals. This distribution reflects current market trends, where tech has been a significant growth driver. However, this tech concentration may lead to higher volatility during market corrections or interest rate hikes. Investors should monitor sector performance and consider rebalancing if one sector becomes overly dominant. Ensuring a balanced sector allocation can help mitigate risks associated with economic cycles and sector-specific downturns, maintaining the portfolio's overall stability.

Regions Info

  • North America
    66%
  • Europe Developed
    11%
  • Japan
    4%
  • Asia Emerging
    4%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    0%
  • Europe Emerging
    0%

Geographically, the portfolio is heavily weighted towards North America, with 66% exposure. This aligns with its focus on U.S. equities, offering strong growth potential but also increased sensitivity to U.S. market fluctuations. The international exposure, though present, is limited, with notable under-exposure to emerging markets. Expanding geographic diversification could reduce reliance on U.S. markets and tap into growth opportunities abroad. Investors might consider increasing allocations to regions like Asia or Latin America to enhance diversification and potentially benefit from different economic cycles and growth trajectories.

Market capitalization Info

  • Mega-cap
    39%
  • Large-cap
    28%
  • Mid-cap
    16%
  • Small-cap
    4%
  • Micro-cap
    1%

The portfolio's market capitalization exposure is concentrated in mega and large-cap stocks, making up 67% of the allocation. This focus provides stability and lower volatility, typical of established companies. However, it may limit growth potential compared to smaller, more dynamic firms. Including more mid-cap and small-cap stocks could enhance growth opportunities, albeit with increased risk. This adjustment would provide a more balanced exposure across market caps, potentially improving risk-adjusted returns. Investors should weigh the trade-off between stability and growth when considering such changes.

Redundant positions Info

  • Schwab U.S. Large-Cap Growth ETF
    iShares Core S&P 500 ETF
    Invesco S&P 500® Quality ETF
    High correlation

The portfolio contains highly correlated assets, particularly among U.S. large-cap ETFs. This correlation can limit diversification benefits, as these assets tend to move in tandem during market shifts. While this alignment supports a cohesive strategy, it may reduce the portfolio's resilience in downturns. To enhance diversification, consider reducing overlap by introducing less correlated assets or sectors. This approach can improve risk management and potentially enhance returns by spreading exposure across different market dynamics. Regularly assessing asset correlation can help maintain an optimal diversification level.

Dividends Info

  • Vanguard Total Bond Market Index Fund ETF Shares 3.40%
  • iShares Core S&P 500 ETF 1.10%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • Invesco S&P 500® Quality ETF 0.60%
  • Invesco S&P 500® Momentum ETF 0.40%
  • Vanguard Small-Cap Index Fund ETF Shares 1.10%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 3.10%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 3.10%
  • Weighted yield (per year) 1.73%

The portfolio's dividend yield stands at 1.73%, with contributions from various ETFs. This yield provides a modest income stream, complementing capital gains. While dividends are not the primary focus, they add stability, especially during market volatility. Investors seeking higher income might consider increasing exposure to dividend-focused assets. However, this could shift the portfolio's risk-return profile. Balancing growth and income is crucial, and any adjustments should align with the investor's income needs and risk tolerance. Regularly reviewing dividend contributions can help maintain the desired income level.

Ongoing product costs Info

  • Vanguard Total Bond Market Index Fund ETF Shares 0.03%
  • iShares Core S&P 500 ETF 0.03%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • Invesco S&P 500® Quality ETF 0.15%
  • Invesco S&P 500® Momentum ETF 0.13%
  • Vanguard Small-Cap Index Fund ETF Shares 0.05%
  • Vanguard FTSE Developed Markets Index Fund ETF Shares 0.05%
  • Vanguard FTSE Emerging Markets Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.05%

The portfolio's total expense ratio (TER) is impressively low at 0.05%, minimizing cost drag on returns. Low costs are crucial for long-term performance, as they compound over time. This cost efficiency supports the portfolio's growth potential, allowing more capital to be invested. Investors should continue monitoring expenses, ensuring they remain competitive. While the current cost structure is highly favorable, any changes in fund fees or allocations should be evaluated for their impact on overall costs. Maintaining a low-cost strategy is a key component of successful long-term investing.

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 portfolio's risk-return profile could be optimized using the Efficient Frontier, which identifies the best possible risk-return ratio. This involves adjusting current allocations to enhance returns for a given risk level. However, optimization is limited to existing assets and their correlations. Investors should consider removing highly correlated assets to improve diversification benefits. This process can help achieve a more efficient allocation, potentially enhancing returns without significantly increasing risk. Regularly reviewing and adjusting allocations ensures the portfolio remains aligned with the investor's goals and risk tolerance.

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