A balanced portfolio with a tech focus and strong dividend yield

Report created on Apr 8, 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 evenly split between two ETFs: Invesco NASDAQ 100 ETF and Schwab U.S. Dividend Equity ETF. This structure provides a balanced exposure to growth-oriented tech stocks and dividend-paying U.S. equities. Compared to a typical balanced portfolio, this allocation is heavily weighted towards equities, which might increase volatility. Consider introducing other asset classes like bonds or international equities to enhance diversification and reduce risk. This can help align with a balanced profile by smoothing returns over time.

Growth Info

Historically, the portfolio has delivered a strong Compound Annual Growth Rate (CAGR) of 10.79%. This performance is impressive compared to many benchmarks, reflecting the robust returns of tech stocks and dividend equities over recent years. However, the maximum drawdown of -24.24% indicates significant volatility during market downturns. While past performance is no guarantee of future results, it suggests the portfolio has potential for high returns, albeit with notable risk. Monitoring economic indicators can help anticipate potential market dips, allowing for strategic adjustments.

Projection Info

The forward projection using a Monte Carlo simulation, which estimates potential portfolio outcomes based on historical data, shows an annualized return of 11.44%. With 962 out of 1,000 simulations yielding positive returns, the portfolio appears robust. However, the 5th percentile projection at 6.1% highlights possible downside risk. While simulations offer insights, they rely on historical patterns that may not repeat. Regularly reviewing the economic environment and adjusting allocations can help mitigate unforeseen risks and capitalize on emerging opportunities.

Asset classes Info

  • Stocks
    100%

The portfolio's allocation is 100% in stocks, lacking diversification across asset classes. This concentration can lead to higher volatility, as equities are typically more sensitive to market fluctuations. Compared to a balanced benchmark, which often includes bonds or other asset types, this portfolio may benefit from incorporating fixed-income securities. Adding bonds can help stabilize returns and provide a buffer during equity market downturns, aligning better with a balanced risk profile. Diversifying across asset classes is key to managing risk effectively.

Sectors Info

  • Technology
    31%
  • Health Care
    12%
  • Consumer Discretionary
    11%
  • Consumer Staples
    10%
  • Telecommunications
    10%
  • Financials
    9%
  • Industrials
    7%
  • Energy
    6%
  • Basic Materials
    1%
  • Utilities
    1%

The portfolio is heavily weighted towards technology, with 31% allocation, followed by healthcare and consumer sectors. This sectoral concentration can lead to higher volatility, especially during periods of tech market corrections or regulatory changes. Compared to common benchmarks, this allocation is less diversified. To mitigate sector-specific risks, consider rebalancing to include more sectors like utilities or real estate. A more balanced sector exposure can reduce risk and improve the portfolio's resilience against cyclical downturns in any single industry.

Regions Info

  • North America
    98%
  • Europe Developed
    1%

Geographically, the portfolio is overwhelmingly focused on North America, with 98% exposure. This concentration limits diversification benefits and increases vulnerability to U.S. market-specific risks. Compared to global benchmarks, which typically include more international exposure, this allocation may miss opportunities in emerging markets or other developed regions. To enhance diversification, consider adding international equities. This can provide exposure to different economic cycles and potentially improve risk-adjusted returns by reducing reliance on the U.S. market alone.

Market capitalization Info

  • Large-cap
    51%
  • Mega-cap
    27%
  • Mid-cap
    19%
  • Small-cap
    2%
  • Micro-cap
    1%

The portfolio is predominantly invested in large-cap stocks, with 51% in big and 27% in mega caps. This focus on large-cap stocks offers stability and lower volatility compared to small-cap stocks. However, it may limit growth potential typically found in smaller companies. Compared to a diversified benchmark, this allocation lacks exposure to mid and small-cap stocks. Consider increasing allocations to these segments to capture growth opportunities and enhance diversification. A balanced market cap exposure can improve overall risk-return characteristics.

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's risk vs return can be optimized using the Efficient Frontier, which identifies the best possible risk-return ratio for a given set of assets. This optimization suggests reallocating within existing assets to achieve a more efficient balance. While this approach doesn't guarantee diversification, it helps maximize returns for a given risk level. Regularly reassessing and adjusting the portfolio in line with the Efficient Frontier can improve performance and ensure alignment with your risk tolerance and investment objectives.

Dividends Info

  • Invesco NASDAQ 100 ETF 0.70%
  • Schwab U.S. Dividend Equity ETF 4.20%
  • Weighted yield (per year) 2.45%

The portfolio's dividend yield stands at 2.45%, with a significant contribution from the Schwab U.S. Dividend Equity ETF. This yield provides a steady income stream, which is attractive for investors seeking regular cash flow. Dividends can also help cushion against market volatility by providing returns even in flat or declining markets. However, relying solely on dividends may limit growth potential. Balancing between growth and income-generating assets can ensure a well-rounded approach to achieving both income and capital appreciation goals.

Ongoing product costs Info

  • Invesco NASDAQ 100 ETF 0.15%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Weighted costs total (per year) 0.10%

The portfolio's total expense ratio (TER) is 0.10%, which is commendably low and supports better long-term performance by minimizing costs. Lower fees mean more of your investment returns are retained, enhancing compounding over time. Compared to industry standards, this TER is competitive, ensuring cost-efficiency. However, it's essential to periodically review fees as part of a comprehensive investment strategy. While costs are currently favorable, staying vigilant can help identify opportunities to further reduce expenses and improve net returns.

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