A cautiously balanced portfolio with a tech tilt and substantial cash holdings for risk management

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

Cautious Investors

This portfolio suits an investor with a cautious risk tolerance, seeking a balance between growth and capital preservation. The substantial allocation to ultra-short-term treasury bonds suggests a preference for liquidity and lower volatility, making it ideal for those with a shorter investment horizon or a need for stability. The emphasis on technology equities indicates a desire for growth, albeit within a framework that prioritizes risk management.

Positions

  • iShares® 0-3 Month Treasury Bond ETF
    SGOV - US46436E7186
    43.00%
  • Invesco QQQ Trust
    QQQ - US46090E1038
    15.00%
  • Vanguard Information Technology Index Fund ETF Shares
    VGT - US92204A7028
    15.00%
  • Vanguard S&P 500 ETF
    VOO - US9229083632
    12.00%
  • Vanguard Total World Stock Index Fund ETF Shares
    VT - US9220427424
    5.00%
  • Vanguard Total Stock Market Index Fund ETF Shares
    VTI - US9229087690
    5.00%
  • Vanguard Total International Stock Index Fund ETF Shares
    VXUS - US9219097683
    5.00%

This portfolio presents a unique blend, heavily weighted towards ultra-short-term treasury bonds at 43%, signaling a conservative risk posture. The remaining allocation is predominantly in equities, with a significant emphasis on technology through the Invesco QQQ Trust and Vanguard Information Technology Index Fund ETF Shares, each constituting 15% of the portfolio. The inclusion of broad-market ETFs like the Vanguard S&P 500, Total World Stock, Total Stock Market, and Total International Stock Index Funds suggests an attempt at diversification, though the heavy tech and cash concentration may limit its effectiveness.

Growth Info

Historical performance, indicating a Compound Annual Growth Rate (CAGR) of 12%, is commendable, especially when considering the portfolio's cautious risk classification. This performance, coupled with a maximum drawdown of -21.02%, reflects a balanced approach to growth and risk management. The days contributing to 90% of returns highlight the impact of significant market movements on portfolio gains, underscoring the importance of staying invested despite market volatility.

Projection Info

Monte Carlo simulations, with 1,000 iterations, show a wide range of potential outcomes, from a 151% to 874.8% increase at the 5th and 67th percentiles, respectively. This suggests a positive outlook, with all simulations yielding positive returns. However, it's crucial to remember that these projections, while useful for planning, are based on historical data and cannot guarantee future performance.

Asset classes Info

  • Stocks
    57%
  • Cash
    42%
  • Bonds
    1%
  • Other
    0%
  • No data
    0%

The portfolio's asset class distribution, with 57% in stocks and 42% in cash (via ultra-short-term bonds), reflects a conservative stance. This high cash position may serve as a buffer against market downturns but could also limit growth potential in bullish conditions. A more balanced allocation could provide better long-term growth prospects while still managing risk.

Sectors Info

  • Technology
    30%
  • Consumer Discretionary
    5%
  • Telecommunications
    5%
  • Financials
    5%
  • Industrials
    3%
  • Health Care
    3%
  • Consumer Staples
    2%
  • Basic Materials
    1%
  • Energy
    1%
  • Utilities
    1%
  • Real Estate
    1%

Sector allocation reveals a heavy tilt towards technology at 30%, which may increase volatility given the sector's cyclical nature. Other sectors like consumer cyclicals, communication services, and financial services are less represented. This concentration in tech underscores the portfolio's growth orientation but also highlights a potential risk of underperformance during tech downturns.

Regions Info

  • North America
    50%
  • Europe Developed
    3%
  • Asia Emerging
    1%
  • Japan
    1%
  • Asia Developed
    1%
  • Australasia
    0%
  • Latin America
    0%
  • Africa/Middle East
    0%
  • Europe Emerging
    0%

Geographic exposure is predominantly North American (50%), with minimal allocations to developed Europe, Asia, and other regions. This concentration may limit global diversification benefits and expose the portfolio to regional economic and political risks. Expanding into emerging markets or increasing allocations to underrepresented regions could enhance diversification and potential for growth.

Market capitalization Info

  • Mega-cap
    28%
  • Large-cap
    18%
  • Mid-cap
    8%
  • Small-cap
    2%
  • Micro-cap
    1%

The market capitalization breakdown, with a focus on mega and large-cap stocks, aligns with the portfolio's risk-averse profile, as these companies typically offer stability. However, the limited exposure to medium, small, and micro-cap stocks may restrict opportunities for higher returns that these segments can offer, albeit with increased volatility.

Redundant positions Info

  • Vanguard Information Technology Index Fund ETF Shares
    Invesco QQQ Trust
    High correlation
  • Vanguard S&P 500 ETF
    Vanguard Total Stock Market Index Fund ETF Shares
    Vanguard Total World Stock Index Fund ETF Shares
    High correlation

The analysis identifies high correlation within the portfolio, particularly between tech-focused ETFs and broad-market ETFs. This redundancy reduces the diversification benefits and suggests an opportunity to reallocate assets to achieve a more distinct and efficient portfolio composition.

Dividends Info

  • Invesco QQQ Trust 0.40%
  • iShares® 0-3 Month Treasury Bond ETF 4.50%
  • Vanguard Information Technology Index Fund ETF Shares 0.50%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total World Stock Index Fund ETF Shares 1.70%
  • Vanguard Total Stock Market Index Fund ETF Shares 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 2.80%
  • Weighted yield (per year) 2.50%

The portfolio's total dividend yield of 2.50% contributes to its overall return, with the iShares® 0-3 Month Treasury Bond ETF offering a notable 4.50% yield. While dividends provide a steady income stream, the focus should also be on balancing yield with growth potential and risk management to align with the investor's objectives.

Ongoing product costs Info

  • Invesco QQQ Trust 0.20%
  • iShares® 0-3 Month Treasury Bond ETF 0.07%
  • Vanguard Information Technology Index Fund ETF Shares 0.10%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total World Stock Index Fund ETF Shares 0.07%
  • Vanguard Total Stock Market Index Fund ETF Shares 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.05%
  • Weighted costs total (per year) 0.09%

With a total Expense Ratio (TER) of 0.09%, the portfolio is efficiently managed cost-wise. Low costs are crucial for long-term growth, as they directly impact net returns. This portfolio benefits from selecting low-cost ETFs, allowing more of the investment's return to compound over time.

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 current allocation, while cautious, could benefit from an optimization process focusing on reducing overlap among highly correlated assets. This would enhance diversification without significantly altering the risk profile. Emphasizing unique, non-correlated investments can improve the portfolio's efficiency, potentially offering a better risk-return trade-off.

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