Balanced portfolio heavily weighted towards US large-cap equities with limited international diversification

Report created on Dec 6, 2024

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio is predominantly composed of ETFs, with a strong emphasis on the Vanguard S&P 500 ETF, which comprises over 65% of the total allocation. This suggests a significant focus on large-cap U.S. equities, providing exposure to well-established companies. The Invesco NASDAQ 100 ETF further accentuates the technology sector's influence, while the Vanguard Total International Stock Index Fund ETF adds some international diversification. The Vanguard S&P Small-Cap 600 Value Index Fund ETF introduces small-cap exposure, offering potential for higher growth but also increased volatility. Balancing these elements is crucial for managing risk and achieving desired returns.

Growth Info

Historically, the portfolio has delivered a robust compound annual growth rate (CAGR) of 15.57%, reflecting strong past performance. However, the maximum drawdown of -25.81% highlights the potential for significant losses during market downturns. Understanding these metrics is vital for assessing risk tolerance and setting realistic expectations. While past performance can provide insights, it's not a guarantee of future results. Investors should consider their ability to withstand volatility and align their investment strategy accordingly, possibly exploring ways to mitigate downside risk.

Projection Info

Monte Carlo simulations, which use historical data to model potential future outcomes, suggest a wide range of possible returns. With 1,000 simulations, the portfolio's median projected growth is 541.42%, indicating strong potential. However, the 5th percentile outcome of 79.24% underscores the inherent uncertainties in investing. While these simulations offer valuable insights, they rely on historical data, which may not fully account for future market conditions. Investors should use these projections as one of many tools in their decision-making process, considering other factors such as economic trends and personal financial goals.

Asset classes Info

  • Stocks
    100%

The portfolio is heavily concentrated in stocks, accounting for nearly 100% of the allocation, with negligible exposure to cash and other asset classes. This concentration suggests a high-risk, high-reward approach, suitable for investors with a strong risk appetite. While stocks offer growth potential, they also bring volatility. Diversifying into other asset classes, such as bonds or real estate, could provide more stability and reduce risk. Investors should assess their risk tolerance and consider whether incorporating additional asset classes aligns with their long-term financial goals.

Sectors Info

  • Technology
    32%
  • Financials
    13%
  • Consumer Discretionary
    11%
  • Health Care
    10%
  • Telecommunications
    9%
  • Industrials
    8%
  • Consumer Staples
    6%
  • Energy
    3%
  • Real Estate
    3%
  • Basic Materials
    3%
  • Utilities
    2%

The portfolio's sector allocation is notably skewed towards technology, which represents nearly 32% of the total. This concentration reflects a bet on the tech industry's continued growth but also exposes the portfolio to sector-specific risks. Other sectors, such as financial services and consumer cyclicals, offer some diversification but remain secondary. A more balanced sector allocation could mitigate risks associated with sector downturns. Investors should evaluate their sector exposure and consider rebalancing to achieve a more diversified sector mix, potentially enhancing the portfolio's resilience.

Regions Info

  • North America
    90%
  • Europe Developed
    5%
  • Asia Emerging
    2%
  • Japan
    2%
  • Asia Developed
    1%
  • Australasia
    1%

Geographically, the portfolio is heavily weighted towards North America, with nearly 90% exposure, limiting its international diversification. This concentration implies a reliance on the U.S. market's performance, which could be beneficial in times of domestic growth but risky if the U.S. economy underperforms. The limited exposure to other regions, such as Europe and Asia, suggests missed opportunities for global diversification. Investors might consider increasing international holdings to capture growth in other markets and reduce reliance on a single geographic area.

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 asset allocation can be optimized using the Efficient Frontier, which identifies the best possible risk-return ratio for a given set of assets. This approach focuses on reallocating existing holdings to achieve maximum efficiency without introducing new assets. By adjusting the weightings of the current ETFs, investors can potentially enhance returns while managing risk. However, it's important to note that optimization does not guarantee diversification or alignment with personal goals. Investors should consider their risk tolerance and investment objectives when implementing optimization strategies.

Dividends Info

  • Invesco NASDAQ 100 ETF 0.60%
  • Vanguard S&P Small-Cap 600 Value Index Fund ETF Shares 2.10%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 2.90%
  • Weighted yield (per year) 1.36%

The portfolio's dividend yield stands at 1.36%, providing a modest income stream. This yield reflects contributions from various ETFs, with the Vanguard Total International Stock Index Fund ETF offering the highest yield at 2.9%. While dividends can enhance returns, they should not be the sole focus. Investors should consider their income needs and the role of dividends in their overall strategy. Reinvesting dividends can compound growth, while a focus on high-yield assets may increase risk. Balancing income and growth is key to achieving financial objectives.

Ongoing product costs Info

  • Invesco NASDAQ 100 ETF 0.15%
  • Vanguard S&P Small-Cap 600 Value Index Fund ETF Shares 0.15%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Weighted costs total (per year) 0.06%

The portfolio's total expense ratio (TER) is 0.06%, reflecting low costs relative to many investment options. This efficiency is primarily due to the Vanguard S&P 500 ETF's minimal fee of 0.03%. Keeping costs low is crucial for maximizing net returns over time, as high fees can erode gains. Investors should regularly review their portfolio's cost structure and seek opportunities to minimize expenses, such as choosing low-cost ETFs or negotiating fees with financial advisors. A focus on cost efficiency can significantly enhance long-term performance.

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