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A balanced portfolio with a strong focus on technology and limited geographic diversification

Report created on Mar 17, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

1/5
Single-Focused
Less diversification More diversification

Positions

This portfolio is structured with a significant emphasis on equity ETFs, particularly the Vanguard Mega Cap Growth Index Fund ETF Shares, which holds the largest share at 26.77%. The portfolio also includes a substantial allocation to short-term treasury bonds at 18.56%. Compared to a typical balanced benchmark, this portfolio leans more towards growth equities, which can offer higher returns but also increase volatility. To better align with a balanced strategy, consider diversifying into additional bond types or sectors to mitigate potential risks associated with concentrated growth investments.

Growth Info

Historically, the portfolio has performed well with a CAGR of 14.15%, indicating strong growth over time. However, it experienced a maximum drawdown of -30.30%, highlighting periods of significant volatility. Compared to benchmarks, the portfolio's performance suggests it has capitalized on growth trends, particularly in technology. While past performance is promising, it's essential to remember that it doesn't guarantee future results. Regularly reviewing the portfolio's allocation and adjusting based on changing market conditions can help sustain performance.

Projection Info

Using Monte Carlo simulations, which analyze potential future outcomes based on historical data, the portfolio shows a wide range of possibilities. The 50th percentile projects a 297.5% return, while the 5th percentile suggests potential losses up to -56.6%. This variability underscores the inherent uncertainty in projections. While simulations provide useful insights, they rely on past data, which may not predict future market movements. Regularly reviewing the portfolio and adjusting allocations can help manage risk and align with long-term goals.

Asset classes Info

  • Stocks
    81%
  • Bonds
    18%

The portfolio's asset class allocation is heavily weighted towards stocks at 81%, with bonds making up 18%. This composition aligns with a growth-oriented strategy but may lack the stability typically associated with a balanced portfolio. Compared to benchmarks, the bond allocation is relatively low, which may increase overall portfolio volatility. To enhance stability and diversification, consider increasing exposure to bonds or other asset classes, which can help cushion against market downturns and provide more consistent returns.

Sectors Info

  • Technology
    38%
  • Financials
    16%
  • Consumer Discretionary
    9%
  • Telecommunications
    7%
  • Consumer Staples
    4%
  • Health Care
    4%
  • Basic Materials
    1%
  • Industrials
    1%
  • Real Estate
    1%

With a 38% allocation to technology, the portfolio is heavily concentrated in this sector, which can lead to higher volatility, especially during periods of technological market corrections. The financial services sector follows with 16%, providing some diversification. However, other sectors like consumer cyclicals and healthcare are underrepresented. To mitigate risk, consider diversifying across additional sectors, which can help balance the portfolio and reduce dependence on the technology sector's performance.

Regions Info

  • North America
    81%

The portfolio's geographic exposure is predominantly in North America at 81%, with minimal allocations to other regions. This concentration could expose the portfolio to regional economic fluctuations. Compared to global benchmarks, this allocation lacks international diversification, which can provide additional growth opportunities and risk mitigation. To enhance geographic diversification, consider adding exposure to developed and emerging markets outside North America, which can offer different growth dynamics and reduce regional risk.

Market capitalization Info

  • Mega-cap
    40%
  • Large-cap
    28%
  • Small-cap
    7%
  • Mid-cap
    5%
  • Micro-cap
    1%

The portfolio's market capitalization is skewed towards mega-cap stocks at 40%, followed by large-cap at 28%. This focus on larger companies can provide stability but may limit growth potential compared to smaller-cap stocks. Small and medium-cap stocks make up a smaller portion, which could enhance growth opportunities. To optimize diversification, consider increasing exposure to mid and small-cap stocks, which can offer higher growth potential and reduce reliance on the performance of mega-cap stocks.

Redundant positions Info

  • Vanguard Mega Cap Growth Index Fund ETF Shares
    Vanguard Information Technology Index Fund ETF Shares
    High correlation

The portfolio includes highly correlated assets, particularly between the Vanguard Mega Cap Growth Index Fund and the Vanguard Information Technology Index Fund. High correlation means these assets tend to move together, reducing diversification benefits. In market downturns, this can lead to more significant losses. To improve diversification, consider replacing some correlated assets with those that have lower correlations, which can help smooth out returns and reduce portfolio risk.

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.

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The portfolio could be optimized using the Efficient Frontier, focusing on achieving the best possible risk-return ratio with the current assets. This involves adjusting allocations to maximize returns for a given level of risk. However, the presence of highly correlated assets may limit diversification benefits. Before optimization, consider reducing overlapping assets to enhance diversification. This approach can help achieve a more efficient portfolio, balancing risk and return effectively.

Dividends Info

  • AbbVie Inc 3.00%
  • Walt Disney Company 1.00%
  • General Motors Company 0.70%
  • The Hackett Group Inc 1.60%
  • Intel Corporation 1.00%
  • Vanguard Mega Cap Growth Index Fund ETF Shares 0.50%
  • Morgan Stanley 3.10%
  • Microsoft Corporation 0.80%
  • Visa Inc. Class A 0.70%
  • Vanguard Short-Term Treasury Index Fund ETF Shares 3.90%
  • Vanguard Information Technology Index Fund ETF Shares 0.70%
  • Vanguard Extended Market Index Fund ETF Shares 1.20%
  • Walmart Inc 0.70%
  • Weighted yield (per year) 1.49%

The portfolio's overall dividend yield stands at 1.49%, reflecting a focus on growth rather than income. Higher-yielding assets like Morgan Stanley and Vanguard Short-Term Treasury Index Fund contribute to this yield. For investors seeking income, this yield may be relatively low. To enhance dividend income, consider reallocating a portion of the portfolio to higher-yielding stocks or ETFs, which can provide a more stable income stream alongside growth potential.

Ongoing product costs Info

  • Vanguard Mega Cap Growth Index Fund ETF Shares 0.07%
  • Vanguard Short-Term Treasury Index Fund ETF Shares 0.04%
  • Vanguard Information Technology Index Fund ETF Shares 0.10%
  • Vanguard Extended Market Index Fund ETF Shares 0.06%
  • Weighted costs total (per year) 0.05%

The portfolio's total expense ratio (TER) is impressively low at 0.05%, thanks to the inclusion of cost-effective Vanguard ETFs. Low costs are beneficial as they enhance long-term returns by reducing the drag on investment performance. This cost efficiency aligns well with best practices for portfolio management. Maintaining a focus on low-cost investments can help sustain better returns over time. Regularly reviewing and comparing fund expenses ensures continued cost-effectiveness.

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