A broadly diversified portfolio with strong US focus and a balanced risk profile

Report created on Jan 9, 2025

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.

Positions

The portfolio is composed primarily of ETFs, with a significant allocation to US equities. SPDR® Portfolio S&P 500 ETF holds the largest share at 40%, followed by Vanguard Total Stock Market Index Fund ETF at 30%. The inclusion of Vanguard Total International Stock Index Fund ETF at 15% adds some international exposure. A smaller portion is allocated to Schwab U.S. Dividend Equity ETF and Schwab U.S. Large-Cap Growth ETF. This composition aligns well with a balanced investment strategy, offering both growth and income potential. Consider reviewing the allocation to ensure it aligns with long-term financial goals.

Growth Info

Historically, the portfolio has demonstrated strong performance with a CAGR of 12.86%. This indicates a solid growth rate over the years, outperforming many traditional savings accounts. However, the maximum drawdown of -33.94% highlights potential volatility, which can be concerning during market downturns. It's important to remember that past performance is not indicative of future results. Regularly reviewing performance against personal financial goals and risk tolerance is recommended to ensure continued alignment.

Projection Info

Monte Carlo simulations project potential future outcomes based on historical data, providing a range of possible end values. This portfolio's simulations indicate a median return of 423.72%, with a high probability of positive returns. While these projections are encouraging, they rely on historical trends and cannot predict future market conditions. It's crucial to remain adaptable and consider adjusting the portfolio as new information becomes available. Regularly revisiting these projections can help in managing expectations and making informed decisions.

Asset classes Info

  • Stocks
    99%
  • Cash
    1%

The portfolio is heavily weighted towards stocks, with over 99% allocation, which is typical for growth-focused strategies. This high equity exposure suggests potential for substantial returns, but also increased volatility. Diversification across asset classes, such as including bonds or other fixed-income securities, could help mitigate risk. Balancing the portfolio with a mix of asset classes can provide more stability during market fluctuations, aligning with a balanced risk profile.

Sectors Info

  • Technology
    28%
  • Financials
    15%
  • Consumer Discretionary
    11%
  • Health Care
    11%
  • Industrials
    9%
  • Telecommunications
    8%
  • Consumer Staples
    6%
  • Energy
    4%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    2%

The sector allocation shows a strong emphasis on technology at 28%, followed by financial services and consumer cyclicals. This alignment with common benchmarks indicates a well-diversified sector approach, though the tech-heavy focus may increase volatility, especially during interest rate hikes. Regularly reviewing sector weights and considering adjustments to align with economic trends can enhance diversification. This proactive approach helps to manage sector-specific risks and capitalize on growth opportunities.

Regions Info

  • North America
    86%
  • Europe Developed
    6%
  • Asia Emerging
    2%
  • Japan
    2%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%

Geographically, the portfolio is concentrated in North America, accounting for 85.77% of holdings. While this aligns with the client region, it limits exposure to global markets. Including more international assets could enhance diversification and reduce regional risk. A broader geographic spread might capture growth opportunities in emerging markets and provide a buffer against domestic economic downturns. Regularly assessing geographic allocations ensures alignment with global economic developments and personal investment goals.

Redundant positions Info

  • Vanguard Total Stock Market Index Fund ETF Shares
    Schwab U.S. Large-Cap Growth ETF
    SPDR® Portfolio S&P 500 ETF
    High correlation

The portfolio contains highly correlated assets, particularly among US-focused ETFs, which may limit diversification benefits. When assets move in tandem, they can increase portfolio volatility during downturns. Reducing correlation by diversifying into less correlated or negatively correlated assets can enhance risk management. Consider evaluating the overlap and exploring alternative investments that offer diversification without sacrificing returns.

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 seeks the best risk-return ratio. By adjusting the allocation among existing assets, it may be possible to achieve a more efficient portfolio. This approach does not necessarily mean changing the asset mix but rather reallocating within the current holdings. Regularly reassessing the portfolio's efficiency can help ensure optimal performance, aligning with both risk tolerance and investment goals.

Dividends Info

  • Schwab U.S. Dividend Equity ETF 3.60%
  • Schwab U.S. Large-Cap Growth ETF 0.40%
  • SPDR® Portfolio S&P 500 ETF 1.30%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.30%
  • Vanguard Total International Stock Index Fund ETF Shares 3.40%
  • Weighted yield (per year) 1.80%

The portfolio's dividend yield stands at 1.8%, with significant contributions from Schwab U.S. Dividend Equity ETF and Vanguard Total International Stock Index Fund ETF. Dividends provide a steady income stream and can be reinvested for compound growth. For investors seeking income, maintaining or increasing dividend-focused holdings may be beneficial. However, it's important to balance dividend income with growth potential, ensuring the portfolio meets both income and capital appreciation goals.

Ongoing product costs Info

  • Schwab U.S. Dividend Equity ETF 0.06%
  • Schwab U.S. Large-Cap Growth ETF 0.04%
  • SPDR® Portfolio S&P 500 ETF 0.02%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.04%

The portfolio's total expense ratio (TER) is impressively low at 0.04%, supporting better long-term performance. Low costs help maximize returns by minimizing the drag on investment gains. Regularly reviewing and managing expenses ensures the portfolio remains cost-efficient. Consider exploring whether lower-cost alternatives are available without compromising on quality or diversification. This focus on cost management can enhance net returns and contribute to achieving financial objectives.

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