A focused portfolio with strong S&P 500 exposure and high dividend yield potential

Report created on Jan 28, 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 heavily concentrated in the Vanguard S&P 500 ETF, with 80% of the total assets. This results in a concentrated exposure to large-cap U.S. equities. The remaining 20% is split equally between two other ETFs, focusing on dividend income. This composition suggests a strong emphasis on U.S. market performance, particularly large-cap stocks, which can lead to higher potential returns but also increases exposure to market-specific risks.

Growth Info

Historically, the portfolio has performed well, with a Compound Annual Growth Rate (CAGR) of 18.47%, which is impressive compared to average market returns. However, it experienced a maximum drawdown of -12.23%, indicating that while returns have been high, there is still exposure to significant market volatility. This performance has been achieved over a limited number of days, emphasizing the importance of timing in capturing returns.

Projection Info

The Monte Carlo simulation, which uses historical data to predict potential future outcomes, suggests a strong likelihood of continued positive performance. With a median projected return of 709.1% and all simulations showing positive returns, the outlook is optimistic. However, it's important to remember that such simulations rely on past data and cannot guarantee future results, especially in unpredictable markets.

Asset classes Info

  • Stocks
    100%

The portfolio is entirely composed of stocks, lacking any allocation to other asset classes like bonds or commodities. While this can lead to higher returns in a bull market, it also means the portfolio might suffer during market downturns due to lack of diversification. Adding different asset classes could help balance risk and improve stability over the long term.

Sectors Info

  • Technology
    30%
  • Financials
    14%
  • Health Care
    11%
  • Consumer Discretionary
    11%
  • Telecommunications
    9%
  • Industrials
    8%
  • Consumer Staples
    6%
  • Energy
    4%
  • Utilities
    2%
  • Real Estate
    2%
  • Basic Materials
    2%

The sector allocation is heavily weighted towards technology, which comprises 30% of the portfolio. This concentration can lead to higher returns in a tech boom but also exposes the portfolio to sector-specific risks, especially during periods of regulatory changes or tech downturns. A more balanced sector allocation could enhance diversification and reduce volatility.

Regions Info

  • North America
    99%
  • Europe Developed
    1%

Geographically, the portfolio is almost entirely focused on North America, with 99% of assets allocated there. This lack of international diversification can increase vulnerability to regional economic downturns. Including more assets from Europe, Asia, or emerging markets could mitigate this risk and provide exposure to global growth opportunities.

Market capitalization Info

  • Mega-cap
    42%
  • Large-cap
    38%
  • Mid-cap
    19%
  • Small-cap
    1%

The portfolio is predominantly invested in large-cap stocks, with 42% in mega caps and 38% in big caps. This focus on larger companies can provide stability and lower volatility but may miss out on the growth potential of smaller companies. Including more mid and small-cap stocks could enhance growth prospects and diversification.

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 current allocation could be optimized using the Efficient Frontier, which seeks the best possible risk-return ratio by adjusting asset weights. While the portfolio's focus on S&P 500 exposure aligns with growth goals, exploring different weightings among the existing ETFs could enhance returns while managing risk more effectively.

Dividends Info

  • Schwab U.S. Dividend Equity ETF 3.50%
  • SHP ETF Trust - NEOS S&P 500 High Income ETF 12.00%
  • Vanguard S&P 500 ETF 1.20%
  • Weighted yield (per year) 2.51%

The portfolio offers a decent dividend yield of 2.51%, primarily driven by the NEOS S&P 500 High Income ETF with a 12% yield. This focus on dividends can provide a steady income stream, appealing to investors seeking regular cash flow. However, it's important to balance high-yield investments with growth-oriented assets to ensure long-term capital appreciation.

Ongoing product costs Info

  • Schwab U.S. Dividend Equity ETF 0.06%
  • SHP ETF Trust - NEOS S&P 500 High Income ETF 0.68%
  • Vanguard S&P 500 ETF 0.03%
  • Weighted costs total (per year) 0.10%

The portfolio's total expense ratio (TER) is a low 0.10%, which is excellent for long-term growth as it minimizes the cost drag on returns. The Vanguard S&P 500 ETF's TER is particularly low at 0.03%, contributing to cost efficiency. Keeping costs low is crucial in maximizing net returns over time, making this a well-aligned aspect of the portfolio.

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