A highly diversified balanced portfolio with strong historic returns and moderate risk exposure

Report created on Dec 8, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification

Positions

The portfolio comprises a mix of ETFs with a focus on large-cap U.S. equities, dividend-paying stocks, small-cap value stocks, and international exposure. The allocation is heavily weighted towards equities, with 89.7% in stocks, and a smaller portion in cash and bonds. This composition provides a balanced approach, combining growth potential with income generation and stability. It's important to maintain a diversified mix to mitigate risks associated with market volatility. To ensure continued alignment with your financial goals, periodically review the asset allocation to adapt to changing market conditions or personal circumstances.

Growth Info

Historically, the portfolio has delivered a strong compound annual growth rate (CAGR) of 13.29%, although it experienced a maximum drawdown of 22.48%. This indicates that while the portfolio has performed well over time, it has also faced significant declines during market downturns. Understanding past performance helps set realistic expectations for future returns. However, remember that historical performance is not indicative of future results. To manage potential drawdowns, consider maintaining a diversified approach and regularly reviewing the portfolio to ensure it aligns with your risk tolerance and investment objectives.

Projection Info

The Monte Carlo simulation, which uses historical data to project future outcomes, suggests a wide range of potential returns for the portfolio. With 1,000 simulations, the median return is 369.94%, indicating a positive outlook. However, the 5th percentile shows a return of 68.59%, highlighting potential downside risk. While simulations provide valuable insights, they are based on historical data and assumptions that may not hold true in the future. To navigate uncertainty, consider stress-testing the portfolio under various scenarios and maintaining a diversified asset mix to cushion against adverse market conditions.

Asset classes Info

  • Stocks
    90%
  • Cash
    6%
  • Bonds
    4%

The portfolio's asset allocation is predominantly in stocks (89.7%), with small allocations to cash (6.1%) and bonds (4.2%). This heavy equity focus supports long-term growth but may increase volatility. Diversifying across asset classes can reduce risk and enhance returns. Consider periodically rebalancing to maintain the desired asset mix and manage risk effectively. Including more bonds or alternative investments could provide additional stability, especially during market downturns. Regularly assess your risk tolerance and investment goals to ensure the asset allocation remains appropriate.

Sectors Info

  • Technology
    22%
  • Financials
    13%
  • Consumer Discretionary
    11%
  • Industrials
    9%
  • Health Care
    8%
  • Telecommunications
    7%
  • Consumer Staples
    6%
  • Energy
    6%
  • Basic Materials
    4%
  • Utilities
    1%
  • Real Estate
    1%

Sector allocation is notably concentrated in technology (22.4%), followed by financial services (13.3%) and consumer cyclicals (11.2%). While this offers growth potential, it also exposes the portfolio to sector-specific risks. A well-diversified sector mix can enhance resilience against economic shifts. Consider reviewing sector allocations periodically to ensure they align with your risk tolerance and market outlook. Balancing exposure across various sectors, such as healthcare, energy, and industrials, can provide a more stable return profile and reduce the impact of sector-specific downturns.

Regions Info

  • North America
    68%
  • Europe Developed
    7%
  • Asia Emerging
    5%
  • Japan
    4%
  • Asia Developed
    3%
  • Africa/Middle East
    1%
  • Australasia
    1%
  • Latin America
    1%

Geographically, the portfolio is predominantly focused on North America (68.1%), with limited exposure to Europe, Asia, and other regions. While this concentration may benefit from the strong performance of U.S. markets, it also increases vulnerability to regional economic fluctuations. Diversifying across regions can reduce geopolitical risks and capture growth opportunities in emerging markets. Consider gradually increasing exposure to underrepresented regions to enhance diversification and potentially improve returns. Regularly review geographic allocations to ensure they align with your long-term investment strategy.

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 Efficient Frontier analysis suggests that the current portfolio could be optimized for a better risk-return ratio. The optimal portfolio has an expected return of 2.67% with a risk level of 0.34%, indicating potential for improved efficiency. This optimization focuses on reallocating existing assets to achieve the best possible risk-return balance. Consider exploring allocation changes within the current asset mix to enhance efficiency. Regularly review the portfolio's performance against the Efficient Frontier to ensure it remains aligned with your investment goals and risk tolerance.

Dividends Info

  • Avantis® International Small Cap Value ETF 3.00%
  • Avantis® U.S. Small Cap Value ETF 1.50%
  • iShares Core MSCI Emerging Markets ETF 2.70%
  • Invesco NASDAQ 100 ETF 0.60%
  • Schwab U.S. Dividend Equity ETF 2.50%
  • iShares Short Treasury Bond ETF 5.10%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 2.90%
  • Weighted yield (per year) 2.13%

The portfolio has a total dividend yield of 2.13%, with contributions from various ETFs. Dividend income can provide a steady cash flow and enhance total returns, especially in volatile markets. High-yielding assets may offer income stability, but it's essential to assess their sustainability. Consider focusing on companies with a track record of consistent dividend payments and growth. Regularly review the dividend yield to ensure it aligns with your income needs and risk tolerance. Balancing growth and income can optimize the portfolio's performance over time.

Ongoing product costs Info

  • Avantis® International Small Cap Value ETF 0.36%
  • Avantis® U.S. Small Cap Value ETF 0.25%
  • iShares Core MSCI Emerging Markets ETF 0.09%
  • Invesco NASDAQ 100 ETF 0.15%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • iShares Short Treasury Bond ETF 0.15%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.12%

The portfolio's total expense ratio (TER) is 0.12%, indicating relatively low costs. Minimizing costs is crucial for enhancing long-term returns, as high fees can erode gains over time. Low-cost ETFs are an efficient way to maintain diversification while keeping expenses in check. Regularly review the cost structure to identify opportunities for cost reduction. Consider switching to lower-cost alternatives if available, without compromising on diversification or performance. Keeping costs low can significantly impact the portfolio's overall return, especially over extended investment horizons.

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