This portfolio has only about 4.2 years of historical data, based on the youngest asset in the portfolio. Some metrics, projections, and AI insights may be less reliable and should be interpreted with caution.

Balanced Risk Portfolio with Single-Focused Diversification and Strong US Market Exposure

Report created on Jul 28, 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 heavily invested in the SPDR® Portfolio S&P 500 ETF, making up 90% of the holdings, with the remaining 10% in the iShares® 0-3 Month Treasury Bond ETF. This allocation suggests a strong focus on large-cap US stocks, balanced by a small portion in short-term treasury bonds for stability. While the S&P 500 ETF provides broad market exposure, the lack of diversification across different asset classes could be a risk if the US market underperforms. To improve resilience, consider adding more asset classes.

Growth Info

Historically, this portfolio has performed well, with a Compound Annual Growth Rate (CAGR) of 15.76%. The maximum drawdown was -22.9%, indicating significant volatility during downturns. The fact that 90% of returns are driven by just 25 days suggests a reliance on market timing. This performance is impressive but underscores the need for diversification to mitigate risk during market downturns. To smooth out returns and reduce volatility, consider incorporating assets with different risk profiles.

Projection Info

Using a Monte Carlo simulation with 1,000 scenarios, the portfolio's future performance was projected. The 5th percentile outcome was a 70.31% return, while the 50th and 67th percentiles showed 266.48% and 355.44% returns, respectively. The annualized return across all simulations was 10.2%. These results highlight the potential for significant growth but also the inherent risk. To better manage future uncertainties, consider a more balanced asset allocation strategy.

Asset classes Info

  • Stocks
    90%
  • Cash
    10%

The portfolio is primarily composed of stocks (89.65%), with a small allocation to cash (9.90%) and bonds (0.45%). This heavy tilt towards equities indicates a growth-oriented strategy but also exposes the portfolio to higher volatility. Diversifying into more asset classes like real estate, commodities, or international bonds could reduce risk and provide more stable returns. A more diversified portfolio can help cushion against market downturns and improve long-term performance.

Sectors Info

  • Technology
    28%
  • Financials
    11%
  • Health Care
    11%
  • Consumer Discretionary
    9%
  • Telecommunications
    8%
  • Industrials
    7%
  • Consumer Staples
    5%
  • Energy
    3%
  • Utilities
    2%
  • Real Estate
    2%
  • Basic Materials
    2%

The sector allocation is concentrated, with Technology (27.93%), Financial Services (11.31%), and Healthcare (10.95%) making up the largest portions. While these sectors have strong growth potential, the lack of exposure to other sectors like Real Estate and Basic Materials could be a drawback. Diversifying across more sectors can help mitigate sector-specific risks and provide more balanced growth. A more evenly distributed sector allocation can enhance the portfolio's resilience.

Regions Info

  • North America
    89%

Geographically, the portfolio is overwhelmingly invested in North America (89.48%), with minimal exposure to Europe Developed (0.48%) and Asia Developed (0.04%). This heavy US focus could be risky if the US market underperforms. Adding more international exposure can help diversify geopolitical and economic risks. A more globally diversified portfolio can capture growth opportunities in different regions and reduce reliance on a single market.

Dividends Info

  • iShares® 0-3 Month Treasury Bond ETF 5.20%
  • SPDR® Portfolio S&P 500 ETF 1.30%
  • Weighted yield (per year) 1.69%

The portfolio's dividend yield data is not provided, but given the high allocation to the S&P 500 ETF, it likely benefits from regular dividend payouts. Dividends can provide a steady income stream and help cushion against market volatility. Reinvesting dividends can also enhance long-term growth. To maximize income, consider adding dividend-focused investments. A diversified income strategy can improve cash flow and provide more financial stability.

Ongoing product costs Info

  • iShares® 0-3 Month Treasury Bond ETF 0.07%
  • SPDR® Portfolio S&P 500 ETF 0.02%
  • Weighted costs total (per year) 0.02%

The portfolio's costs are very low, with a total expense ratio (TER) of 0.02%. Low costs are beneficial as they enhance net returns over time. Keeping investment costs low is a crucial aspect of long-term success. To maintain cost efficiency, continue focusing on low-cost ETFs and index funds. Monitoring and minimizing costs can significantly impact overall performance. A cost-effective strategy ensures more of the returns are retained.

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