A cautious portfolio with a strong focus on U.S. equities and high dividend income
Report created on Jan 28, 2025Risk profile
3/7
Diversification profile
2/5
Positions
-
SP SHP ETF Trust - NEOS S&P 500 High Income ETF
SPYI 44.61% -
SC Schwab U.S. Dividend Equity ETF
SCHD - US8085247976 30.05% -
VO Vanguard S&P 500 ETF
VOO - US9229083632 25.34%
The portfolio is heavily weighted towards ETFs, with a significant 44.61% in the NEOS S&P 500 High Income ETF, 30.05% in the Schwab U.S. Dividend Equity ETF, and 25.34% in the Vanguard S&P 500 ETF. This composition reflects a concentration in large-cap U.S. equities, which is typical for cautious investors seeking stability. While this structure provides a solid foundation, it lacks diversification across different asset classes, which could expose the portfolio to sector-specific risks. To enhance diversification, consider incorporating other asset types like bonds or international equities.
Growth
Historically, the portfolio has performed well, achieving a Compound Annual Growth Rate (CAGR) of 14.97%. This suggests strong past returns, especially given the low-risk profile. However, with a maximum drawdown of -10.84%, the portfolio has experienced moderate volatility. Comparing these figures to relevant benchmarks can provide perspective on the portfolio's resilience during market downturns. Keep in mind that past performance does not guarantee future results, so it's essential to maintain a balanced view of risk and return.
Projection
The Monte Carlo simulation, which uses historical data to project future outcomes, indicates a robust potential for returns, with the 50th percentile showing a 685.5% increase. However, it's crucial to remember these projections are based on past data and assumptions, which may not hold in the future. While the simulations suggest positive outcomes, maintaining a diversified approach can help manage unforeseen risks. Regularly reviewing and adjusting the portfolio based on changing market conditions is advisable.
Asset classes
- Stocks 99%
- Cash 1%
The portfolio is overwhelmingly invested in stocks, accounting for 99% of the allocation, with a mere 1% in cash. This heavy tilt towards equities aligns with a growth-focused strategy but may not suit all risk profiles, particularly for cautious investors. Diversifying into other asset classes like fixed income or real estate could provide additional stability and income streams. A more balanced asset allocation would better align with a cautious investment strategy, mitigating potential risks associated with stock market volatility.
Sectors
- Technology 26%
- Financials 15%
- Health Care 12%
- Consumer Discretionary 11%
- Industrials 9%
- Consumer Staples 8%
- Telecommunications 8%
- Energy 6%
- Utilities 2%
- Basic Materials 2%
- Real Estate 1%
Sector allocation shows a significant concentration in technology (26%), which can lead to higher volatility, especially during periods of tech market instability. Other sectors like financial services (15%) and healthcare (12%) provide some balance but still reflect a strong bias towards specific industries. For a cautious investor, this sector concentration may pose risks. Diversifying across more sectors can help reduce exposure to sector-specific downturns, providing a more stable and resilient portfolio over time.
Regions
- North America 99%
- Europe Developed 1%
The portfolio's geographic exposure is heavily skewed towards North America, with 99% of the assets in this region. This lack of international diversification could leave the portfolio vulnerable to U.S. market-specific risks. Incorporating more global equities, particularly from emerging markets, could enhance diversification and potentially improve risk-adjusted returns. A more geographically balanced portfolio can help cushion against regional economic downturns and capitalize on global growth opportunities.
Market capitalization
- Large-cap 45%
- Mega-cap 33%
- Mid-cap 20%
- Small-cap 2%
The portfolio's market capitalization breakdown shows a strong preference for large-cap stocks, with 45% in big caps and 33% in mega caps. This focus on larger companies typically offers stability and established growth, aligning with a cautious investment approach. However, the limited exposure to small and medium-cap stocks (22% combined) might restrict potential growth opportunities. Including a broader range of market caps can provide a more balanced risk-return profile, capturing growth from smaller, innovative companies.
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 could be optimized using the Efficient Frontier, which suggests a more efficient allocation with an expected return of 19.23% at the same risk level. This involves reallocating assets to achieve the best possible risk-return balance. However, it's important to note that this optimization is based on historical data and assumptions, which may not predict future outcomes. Regularly reassessing the portfolio's alignment with personal goals and market conditions is essential to maintain optimal performance.
Dividends
- 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) 6.71%
With a total dividend yield of 6.71%, the portfolio provides a substantial income stream, largely driven by the NEOS S&P 500 High Income ETF's 12% yield. This is attractive for income-focused investors, offering a steady cash flow. However, high yields can sometimes imply higher risk. It's essential to assess the sustainability of these dividends and consider diversifying income sources to ensure long-term stability. Balancing yield with growth potential can enhance overall portfolio performance.
Ongoing product costs
- 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) 0.33%
The portfolio's total expense ratio (TER) is 0.33%, which is relatively low, supporting better long-term performance by minimizing costs. The Schwab U.S. Dividend Equity ETF and Vanguard S&P 500 ETF contribute to this efficiency with TERs of 0.06% and 0.03%, respectively. Keeping costs low is crucial for maximizing net returns, particularly over the long term. Regularly reviewing and optimizing fund choices can help maintain cost efficiency and improve overall portfolio returns.
What next?
Ready to invest in this portfolio?
Select a broker that fits your needs and watch for low fees to maximize your returns.
Create your own report?
Join our community!
Compare your holdings
How much do the funds you hold actually overlap with the ones people weigh them against?
The information provided on this platform is for informational purposes only and should not be considered as financial or investment advice. Insightfolio does not provide investment advice, personalized recommendations, or guidance regarding the purchase, holding, or sale of financial assets. The tools and content are intended for educational purposes only and are not tailored to individual circumstances, financial needs, or objectives.
Insightfolio assumes no liability for the accuracy, completeness, or reliability of the information presented. Users are solely responsible for verifying the information and making independent decisions based on their own research and careful consideration. Use of the platform should not replace consultation with qualified financial professionals.
Investments involve risks. Users should be aware that the value of investments may fluctuate and that past performance is not an indicator of future results. Investment decisions should be based on personal financial goals, risk tolerance, and independent evaluation of relevant information.
Insightfolio does not endorse or guarantee the suitability of any particular financial product, security, or strategy. Any projections, forecasts, or hypothetical scenarios presented on the platform are for illustrative purposes only and are not guarantees of future outcomes.
By accessing the services, information, or content offered by Insightfolio, users acknowledge and agree to these terms of the disclaimer. If you do not agree to these terms, please do not use our platform.
Instrument logos provided by Elbstream.
Help us improve Insightfolio
Your feedback makes a difference! Share your thoughts in our quick survey. Take the survey