A balanced portfolio with high dividend focus and strong North American bias

Report created on Jan 13, 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 primarily composed of six ETFs, with a strong emphasis on dividend-focused and large-cap U.S. equities. The largest allocations are in the Invesco NASDAQ 100 ETF and Schwab U.S. Dividend Equity ETF. The portfolio's composition aligns with a balanced risk profile, but it lacks diversity across asset classes, with nearly 100% in stocks. This concentration can limit exposure to other asset classes like bonds or real estate, which typically offer different risk-return characteristics. Consider diversifying into other asset classes to enhance balance and reduce risk.

Growth Info

Historically, the portfolio has delivered a robust Compound Annual Growth Rate (CAGR) of 15.63%, outperforming many traditional benchmarks. However, it has also experienced a significant maximum drawdown of -22.54%, indicating potential volatility during market downturns. While past performance is promising, it is essential to remember that historical results do not guarantee future returns. Monitoring market conditions and adjusting allocations as needed can help manage risk and maintain growth.

Projection Info

Using Monte Carlo simulations, which estimate future performance based on historical data, the portfolio shows a wide range of potential outcomes. The median projection suggests an 817.11% increase, with a high probability of positive returns. However, these projections are based on past data, and future market conditions could differ significantly. While the simulations provide a useful guide, it's important to remain flexible and ready to adjust the portfolio as new information and market trends emerge.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily skewed towards equities, with almost 100% in stocks and a minuscule cash position. This allocation can drive growth but also exposes the portfolio to stock market volatility. Compared to a typical balanced portfolio, which might include bonds or alternative assets, this portfolio is less diversified. Introducing other asset classes could help mitigate risk and provide more stable returns over time, especially during periods of stock market turbulence.

Sectors Info

  • Technology
    26%
  • Financials
    13%
  • Energy
    12%
  • Health Care
    11%
  • Consumer Discretionary
    10%
  • Consumer Staples
    8%
  • Industrials
    8%
  • Telecommunications
    7%
  • Utilities
    3%
  • Basic Materials
    2%

The sector allocation is tech-heavy, with significant investments in technology, financial services, and energy. This concentration can lead to higher volatility, especially if these sectors face downturns. Compared to a more diversified benchmark, the portfolio is underweight in sectors like real estate and basic materials. To reduce risk and improve stability, consider increasing exposure to underrepresented sectors, which can provide a buffer during sector-specific downturns.

Regions Info

  • North America
    96%
  • Asia Emerging
    1%
  • Australasia
    1%
  • Europe Developed
    1%

Geographically, the portfolio is overwhelmingly invested in North America, with over 96% exposure. This heavy concentration limits diversification and increases vulnerability to regional economic downturns. In comparison, global benchmarks usually have broader geographic diversification. To enhance resilience and capture growth opportunities, consider increasing exposure to emerging markets or other developed regions, which can offer different economic dynamics and growth prospects.

Redundant positions Info

  • Vanguard High Dividend Yield Index Fund ETF Shares
    Schwab U.S. Dividend Equity ETF
    iShares Core Dividend Growth ETF
    High correlation

The portfolio contains highly correlated assets, particularly among the dividend-focused ETFs. High correlation means these assets tend to move together, offering limited diversification benefits. During market downturns, this can lead to increased risk as losses in one asset may not be offset by gains in another. To improve diversification, consider replacing some of these correlated assets with others that have historically shown lower correlation, providing a more balanced risk profile.

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 can be optimized using the Efficient Frontier, which seeks the best possible risk-return ratio based on current assets. However, the presence of highly correlated assets suggests that diversification benefits may be limited. Before optimizing, consider reducing overlap by removing or replacing correlated assets. This will enhance the portfolio's efficiency, ensuring that each asset contributes uniquely to the overall risk-return profile, rather than duplicating exposure.

Dividends Info

  • iShares Core Dividend Growth ETF 2.30%
  • Invesco NASDAQ 100 ETF 0.60%
  • Schwab U.S. Dividend Equity ETF 3.70%
  • Vanguard S&P 500 ETF 1.30%
  • Vanguard High Dividend Yield Index Fund ETF Shares 2.80%
  • Weighted yield (per year) 1.89%

The portfolio's overall dividend yield is 1.89%, primarily driven by the Schwab U.S. Dividend Equity ETF and Vanguard High Dividend Yield Index Fund. This yield can provide a steady income stream, which is beneficial for investors seeking regular income. However, relying heavily on dividends can sometimes limit growth potential. Balancing dividend-paying assets with growth-oriented investments can help achieve both income and capital appreciation goals, depending on individual needs.

Ongoing product costs Info

  • iShares Core Dividend Growth ETF 0.08%
  • Invesco NASDAQ 100 ETF 0.15%
  • Schwab U.S. Dividend Equity ETF 0.06%
  • Sprott Uranium Miners ETF 0.75%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard High Dividend Yield Index Fund ETF Shares 0.06%
  • Weighted costs total (per year) 0.13%

The portfolio's total expense ratio (TER) is 0.13%, which is impressively low and supports better long-term performance by reducing the drag on returns. The Sprott Uranium Miners ETF has the highest cost at 0.75%, which could be an area for cost reduction. Evaluating whether lower-cost alternatives can replace higher-fee assets without sacrificing returns could further enhance net performance. Maintaining low costs is crucial for maximizing investment returns over time.

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