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Balanced portfolio with strong tech focus and global diversification

Report created on Jan 30, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification
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Positions

The portfolio is primarily composed of ETFs, with a significant allocation to large-cap U.S. equities. It has a 25% stake in both the Invesco NASDAQ 100 ETF and the Vanguard S&P 500 Growth Index Fund ETF Shares, contributing to a tech-heavy bias. Additionally, 15% is allocated to international dividend-focused ETFs, and 15% is spread across emerging markets like Taiwan and India. This structure is well-balanced for growth, aligning with a balanced risk profile. However, the concentration in tech stocks may expose the portfolio to sector-specific risks. Consider diversifying further into sectors less represented to mitigate potential volatility.

Growth Info

Historically, the portfolio has delivered an impressive CAGR of 14.61%, outperforming many benchmarks. However, it experienced a maximum drawdown of -18.60%, indicating vulnerability during market downturns. The portfolio's returns are concentrated in just 12 days, suggesting high volatility and reliance on a few key performance days. While past performance is not indicative of future results, the strong historical returns suggest potential for continued growth. It's crucial to remain aware of the risks associated with such concentrated performance bursts.

Projection Info

The Monte Carlo simulation, which uses historical data to project future outcomes, indicates a wide range of potential returns. With 1,000 simulations, the portfolio's potential end values range significantly, with a median expected growth of 307.5%. While 984 simulations resulted in positive returns, it's essential to remember that these projections are not guarantees. The method provides a probabilistic view, but actual outcomes can differ due to unforeseen market conditions. Regularly reviewing and adjusting the portfolio can help navigate these uncertainties.

Asset classes Info

  • Stocks
    96%
  • No data
    3%

The portfolio is heavily weighted towards stocks, with 96% allocated to equities. This high equity exposure can enhance growth potential but also increases risk, especially during market downturns. The remaining 4% is not classified, suggesting limited diversification across asset classes. While equities have historically provided strong returns, consider incorporating other asset classes such as bonds or real estate to balance risk and return. Diversifying across asset classes can help mitigate volatility and provide a more stable investment experience.

Sectors Info

  • Technology
    41%
  • Consumer Discretionary
    12%
  • Telecommunications
    11%
  • Financials
    9%
  • Industrials
    8%
  • Health Care
    7%
  • Consumer Staples
    6%
  • Basic Materials
    2%
  • Energy
    2%
  • Utilities
    1%
  • Real Estate
    1%

The portfolio is notably tech-heavy, with 41% allocated to technology stocks. This concentration aligns with current growth trends but may increase volatility during periods of interest rate hikes or tech sector downturns. Other sectors like consumer cyclicals and communication services also have significant representation, while sectors like energy and utilities are underrepresented. Balancing sector exposure can enhance diversification and reduce sector-specific risks. Consider increasing allocation to defensive sectors like healthcare or consumer staples to provide stability during market fluctuations.

Regions Info

  • North America
    71%
  • Europe Developed
    8%
  • Japan
    7%
  • Asia Developed
    6%
  • Asia Emerging
    6%
  • Australasia
    1%

Geographically, the portfolio is heavily skewed towards North America, with 71% exposure. While this aligns with many U.S.-based investors' preferences, it limits diversification benefits from international markets. The remaining 29% is spread across Europe, Japan, and emerging Asian markets, providing some global exposure. Increasing allocation to regions like Latin America or Africa/Middle East could enhance diversification and reduce reliance on U.S. market performance. Global diversification can help mitigate risks associated with regional economic downturns and currency fluctuations.

Market capitalization Info

  • Mega-cap
    55%
  • Large-cap
    32%
  • Mid-cap
    9%

The portfolio primarily focuses on large-cap companies, with 55% in mega-cap and 32% in big-cap stocks. This emphasis on large, established companies provides stability and lower volatility. However, it may limit growth potential compared to smaller-cap stocks. Consider incorporating small or mid-cap stocks to capture potential growth opportunities. While smaller companies can be more volatile, they often offer higher growth potential. Balancing market capitalization exposure can improve diversification and provide a more comprehensive investment approach.

Redundant positions Info

  • Invesco NASDAQ 100 ETF
    Vanguard S&P 500 Growth Index Fund ETF Shares
    JPMorgan Nasdaq Equity Premium Income ETF
    High correlation

The portfolio contains highly correlated assets, particularly among the Invesco NASDAQ 100 ETF, Vanguard S&P 500 Growth Index Fund ETF Shares, and JPMorgan Nasdaq Equity Premium Income ETF. High correlation means these assets tend to move together, reducing diversification benefits and potentially increasing risk during market downturns. To improve diversification, consider replacing or reducing exposure to these correlated assets. Diversifying into less correlated assets can help mitigate risks and enhance the portfolio's overall stability.

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.

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The portfolio's risk versus return can potentially be optimized using the Efficient Frontier, which helps identify the best risk-return ratio based on current assets. However, the presence of highly correlated assets may limit the benefits of such optimization. Before attempting optimization, consider reducing overlapping assets to enhance diversification. Once the portfolio is sufficiently diversified, the Efficient Frontier can guide reallocation to achieve a more optimal balance between risk and return.

Dividends Info

  • iShares MSCI India ETF 0.80%
  • JPMorgan Nasdaq Equity Premium Income ETF 9.50%
  • Invesco NASDAQ 100 ETF 0.60%
  • Vanguard International Dividend Appreciation Index Fund ETF Shares 1.90%
  • Vanguard S&P 500 Growth Index Fund ETF Shares 0.30%
  • Vanguard FTSE Pacific Index Fund ETF Shares 3.10%
  • Weighted yield (per year) 2.60%

The portfolio's dividend yield stands at 2.60%, with significant contributions from the JPMorgan Nasdaq Equity Premium Income ETF (9.50%) and the Vanguard FTSE Pacific Index Fund ETF Shares (3.10%). Dividends provide a steady income stream and can enhance total returns, especially in volatile markets. However, the focus on high-growth tech stocks may limit overall dividend income. Consider balancing growth and income by incorporating more dividend-focused assets. A diversified dividend strategy can provide stability and support long-term wealth accumulation.

Ongoing product costs Info

  • iShares MSCI Taiwan ETF 0.59%
  • iShares MSCI India ETF 0.65%
  • JPMorgan Nasdaq Equity Premium Income ETF 0.35%
  • Invesco NASDAQ 100 ETF 0.15%
  • Vanguard International Dividend Appreciation Index Fund ETF Shares 0.15%
  • Vanguard S&P 500 Growth Index Fund ETF Shares 0.10%
  • Vanguard FTSE Pacific Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.22%

The portfolio's total expense ratio (TER) is 0.22%, which is relatively low and supports better long-term performance by minimizing costs. The majority of ETFs have TERs below 0.20%, except for the iShares MSCI Taiwan and India ETFs, which have higher costs. While these costs are still reasonable, consider monitoring them to ensure they don't erode returns over time. Lowering costs where possible can enhance net returns, allowing more of your investment to compound over the long term.

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